No matter where you look on the internet, there is always going to be someone who tells you that they know more than you do about investing. It’s almost as if it’s a rite of passage to try and be the biggest know-it-all in the world about whether or not you should buy, hold or sell an equity.
In many ways and for various reasons, this is what the Redditor is trying to convey in their post on r/dividends. After seeing several “sold SCHD” posts in this same subreddit, they are wondering if it speaks to a broader pattern, specifically if we are at the top of the tech bubble and a crash is coming.
Is This a Broader Signal of Something?
The Redditor’s concern, right or wrong, stems from the sheer volume of posts they have seen lately talking about other Redditors selling SCHD in favor of growth positions. As a result, they believe that we might be at or near the top of a serious tech bubble.
They are padding their argument with the idea that Tesla has a price-to-earnings (P/E) ratio of 250 and Palantir has a P/E of 591, and both are still gaining. Their concern is based on the reality that these 50+ PE ratios can’t and won’t hold forever, especially when you consider that the S&P 500’s historical average is only 17.
This individual is also concerned about the Dow Jones index being based on companies that make physical products (and not tech names) that mostly sell services. While that isn’t entirely true, they believe that tech isn’t as exposed to tariffs at the moment, so these few tech stocks are really what’s driving market growth, and if courts overturn the tariffs, there could be a massive rotation in what is driving the market.
What Reddit Says
While the Reddit thread itself focuses mostly on people being too lazy to sell, others argue that trying to sell SCHD is more about market-timing than anything else. What’s worse is that many commenters in this post openly admit that they don’t know exactly what they own, but that they are buying what they believe is hot right now, and it’s a bit of performance-chasing. Others argue that SCHD is all about quality and dividend durability, rather than trying to keep up with the megacap names that are driving market growth.
Is SCHD Lagging Because of an Ultra-Concentrated Market?
In response to this Redditor’s question, what I would ask back to them in return is whether or not the Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) is lagging because the market is ultra-concentrated. As it stands, year-to-date, the S&P 500 is up approximately 15% as of Oct. 1, 2025, while other popular names in r/dividends like the Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) are up 18% YTD. When you consider that SCHD is only up approximately 3.7% YTD, it does beg the question of whether or not this Redditor is correct.
To their original point, I would say that yes, concentration is near records as the top 10 S&P 500 names are approximately 39% of the whole index, a historically high number, so the index, as the Redditor points out, is being driven by just a handful of names. This, in turn, is going to hurt SCHD as megacap growth is leading the way.
I would also address the Redditor’s concerns about P/E by noting that currently, the S&P 500’s P/E is situated between 22.5 and 22.8, while the five-year and 10-year averages are 19.9 and 18.6, respectively. This means that there is far less room for error if any of the big names leading the megacap growth experience disappointment.
Are We Near a Market Top?
I would also be the first to admit that if you ask a dozen different big names in the market, you’ll probably get 12 different answers about what the future looks like. This said, the market rally right now is being driven by a handful of mega-cap tech stocks. You could also add here that this Redditor isn’t wrong, as this could be a warning sign that we are late in the cycle of something. If we get a point where more stocks are helping to drive the market, that’s a good sign, but if market drivers start to narrow in performance, that would be very bad.
As for where SCHD fits in, it tends to stand out the most when the spotlight isn’t on tech names and more toward companies with stronger balance sheets and steady cash flows. Its current yield of 3.7% isn’t going to win any awards, but if all you are cashing is a steady dividend for passive income, it’s okay to hang onto it right now.
Still, the best advice I would give anyone, this Redditor or otherwise, is to diversify their portfolio and mitigate risk. There should be a focus on a portfolio that has room for both growth and value stocks. It’s also always good to continue monitoring P/E ratios, as this Redditor suggests, to make sure you are comfortable with your investments.
However, to this point, it’s also worth noting that regularly reviewing your investment strategy, at least once a quarter, is the best way to try and stay close to market trends and make sure you can meet your long-term financial goals.
Top Gaining Stocks
Top Losing Stocks
