High Carb Diet
During the revolution, French women and men complained "the price of bread is too damn high." Marie Antoinette was famously out-of-touch, but almost certainly never said "let them eat cake." The phrase was "Qu'ils mangent de la brioche." Brioche is cake-adjacent, at best. And she didn't actually say it. It's a phrase that pre-dated her. Her general out-of-touchness was enough that enthusiastic Jacobians lopped off her head. She taught elites an important lesson: brush-off peasants at your own risk.
Heirloom lessons
You can see a present day heir of Marie's lesson in elite index providers, like the Nasdaq 100. They're wonky things rolled out of ivory towers that (generally) try to look out for the little guy. They do a pretty good job. The most useful version of indices is when they're packaged into tradable ETFs and anyone can own the entire index without the hassle of managing that.
People still complain. One complaint hurled against index ETFs is that they buy high. Buying at high prices is generally bad for investment returns. Companies that grow big enough to make it into a broad index do that only after they get big. A lot of their returns are gone by then.
But once they're in, they're in, right? Right?
Strict diet
As part of their mission to look out for the little guy, the Nasdaq 100 and other indices have some guardrails to manage risk. Part of the appeal is that they diversify it. They don't just buy things according to how big they are. If one or a few companies make up too much of an index, the index looks more like just those few companies and stops being useful as a broad measure. The wonks put in some obscure rules on how big certain constituents can get.
This mostly hasn’t mattered. Some companies have grown and then other companies have grown so that most indices carry on without bumping into any arbitrary guardrails.
But you might have noticed some of the biggest tech companies — Nvidia, Apple, Google, Microsoft, Amazon — have grown rather large. They have bumped up against some of the size restrictions. Twice. In 2023 and again in spring 2026, the Nasdaq 100 reduced the weight of some companies in the index.
This meant that big index ETFs and investors that track them had to sell because their holdings were a little too big, a little too successful. Investors usually have to pick over scraps like in bankruptcy or in government privatizations to find companies being sold where the sellers don't care about price. Forced index selling often leads to higher returns. This was an opportunity to invest in companies like Amazon and Google with already pretty good businesses attached.
OK, so index trackers had to sell. Twice. Those are just opportunistic moments. Surely large, sophisticated investors would never sell cake to eat bread, right? Right?
No taxes on bread
Of course they would. And they do it for sophisticated reasons. Just like most places don't tax staples like bread, trades by Regulated Investment Companies can be tax-free if they meet certain financial health requirements. One of those is holdings in mutual funds and ETFs need to be less than 5% of holdings in certain circumstances. All of those tech companies are bigger than 5% of the Nasdaq. They're bigger than 5% of the S&P 500 too. That adds up to plenty of regular selling.
Bread and butter
Lamplighter loves a forced seller. It’s a key ingredient to the investment process. Investors are much more likely to find a deal if the seller doesn't or can't care about price. Usually this means looking for things in weird, unique or taboo situations. A concentration of growth in the biggest companies like Amazon and Google over the past few years led to some investors needing to sell because they're doing too well. The underlying businesses there are humming. The opportunity in front of them looks to be growing. That's a diet for healthy returns.
Disclaimer: None of this is investment advice. It's meant to illustrate ways LCM thinks about investing. Things that LCM decides are good investments for LCM and its clients are based on many criteria, not all of which are covered here. Some or all of LCM's ideas may not be suitable for other investors. LCM does not recommend investing either long or short any position mentioned. LCM may own positions in some of the companies mentioned. Some of its ideas will lose money — investing entails risk. See full disclaimer here.