Fidelity Investment portfolio planner Chris Wong wrote that as of mid-year, the market has been dominated by large-cap stocks for the past two years, with market breadth below long-term average levels. Although the market has broadened since then, if the market continues to develop as expected, there is still an opportunity for further expansion in market breadth. Given the high weighting of the "FAANG" stocks in the S&P 500 index, the popularity of index funds may have contributed to market concentration. Investors may prefer small and mid-cap stocks, so small and mid-cap stocks may benefit from market expansion. In addition, when the Federal Reserve begins cutting interest rates, the stock market tends to perform well. With the rate-cutting cycle already underway, this means that stock prices may continue to strengthen. In an environment of interest rate cuts, sectors beyond large growth stocks may perform better, such as value stocks and non-large-cap stocks. Valuation and profit prospects are positive for small and mid-cap stocks Chris Wong stated that the valuation gap between small and mid-cap stocks and large-cap stocks has narrowed and even fallen below long-term historical average levels. Small and mid-cap stocks have room for valuation growth and are expected to catch up with large-cap stocks. One challenge facing small and mid-cap stocks, particularly small-cap stocks, is the upcoming "debt maturity wave" in the next five years. However, as the rate-cutting cycle becomes more certain, small and mid-cap stocks may be able to refinance their debt, which will help reduce expenses and increase profits. Investors may seek to invest in markets outside the United States The FAANG stocks have consistently performed well, meaning that some investors may be overly focused on the United States, growth stocks, and large-cap stocks. Therefore, by exploring other opportunities in the global market, investors may effectively diversify risk. Furthermore, considering Europe's strong fundamentals and the central bank's rate cuts, European consumer stocks' valuations are more attractive than their American counterparts. It is worth emphasizing that there are many attractive companies in Europe, many of which have global operations. In addition, these companies often derive their revenue from multiple sources, making them an excellent way to invest in expanding markets such as India and China. Meanwhile, the outlook for the UK stock market is healthier than in recent years. In addition to cheap valuations, the combination of growth and income stocks in the UK stock market is attractive, providing investors with many options. In addition, investors have overlooked Asia for some time. However, Asia's strong profit growth and expectations of structural trends supporting regional stocks, including moderate inflation in Asia, mean there is room for rate cuts. This is due to fundamental support, including less corporate and consumer borrowing, healthier current account surpluses, larger foreign exchange reserves, and less USD-denominated debt. There are signs of initial recovery in China, especially in areas such as exports and manufacturing. Recent loose measures by the authorities may further support the recovery. In addition, Chinese companies have been announcing dividend increases and share buyback plans, placing greater emphasis on shareholder returns. Another factor that may drive market breadth is earnings. Non-large-cap stocks have shown strong earnings performance recently, with many companies expected to achieve their first profit growth since the fourth quarter of 2022. In contrast, the earnings growth rate of large-cap stocks has slowed compared to previous high-speed growth. Diversification presents opportunities for investors While tech stocks have been popular in the past two years, there are still areas in the global tech sector that some investors should not overlook. The recent uptrend has been driven mainly by a group of large-cap stocks focused on artificial intelligence (AI) themes, overshadowing numerous industries that may offer opportunities in the tech market. Within the AI value chain, data infrastructure and information technology consulting companies are important links, but are often underestimated. Investors also underestimate the long-term potential of software companies to monetize AI capabilities. The market's obsession with large tech stocks has led to a neglect of small and mid-cap tech stocks, making some small and mid-cap stocks potential acquisition targets. Some traditional industries (such as industrial) are using technology to enhance internal operations and serve customers. However, the market has not yet considered these technology-driven transformations, presenting investors with diversified investment opportunities. Considering all the factors mentioned above, areas outside large-cap stocks offer significant value for investors. Small and mid-sized companies worldwide may benefit from the rate-cutting cycle. Dividend stocks are also supported by strong earnings and valuations, offering sustainable and inflation-resistant total returns, not just in US dividend stocks but also in Europe, the UK, and Asia. Even within popular industries such as tech stocks, opportunities exist beyond hot topics and large-cap stocks. Former Fidelity Investments fund manager Peter Lynch stated that when investing in the stock market, investors should diversify their investments, hold different types of funds, and invest in various styles of stocks, such as growth stocks and value stocks, as well as small and large-cap stocks. Growth stocks and the US stock market have become overly concentrated. While continuing to capture market growth, investors can also consider diversifying their investments across different regions, industries, and broader areas of stocks to manage risk in a potentially uncertain environment.