Billionaire Warren Buffett’s advice for most investors has been to buy a low-cost fund that tracks the S&P 500. But that looks like a risky proposition to me right now.

The index is heavily concentrated around a few very similar companies. And the rest of the US economy doesn’t give me much encouragement either.

Concentration

Overall, the S&P 500’s done very well in recent years. But not every company’s done equally well — a handful of strong performers have offset much weaker results elsewhere.

For example, Microsoft’s revenues grew by around 15% in 2025, while Kraft Heinz saw a 2.5% decline in sales. For the index as a whole though, the net effect’s positive.

Microsoft’s sales increased by $36bn, while the drop at Kraft Heinz was less than $1bn. In other words, growth at bigger firms offsets a lot of smaller businesses going backwards.

The trouble is, it also creates risk. If at business like Microsoft falters for any reason, I don’t think there are going to be enough Kraft Heinz-like firms to offset this. 

The US economy

Something similar is true of the US economy. Consumer spending – which accounts for around 70% of US GDP – looks resilient, but there’s more going on beneath the surface.

In reality, the overall resilience is being driven by strong contributions from the most well-off in society. And just like the index, this has the power to cover a lot of weakness elsewhere. 

A a result, the same risk emerges. If anything causes the wealthiest households in the US to rethink their consumption levels, this is unlikely to be offset by increased spending elsewhere.

As a result, I’m wary of the idea that investing in an S&P 500 fund is a good idea right now. But I do think there are potential opportunities within the index.

Insurance

One stock I’ve been buying recently is Brown & Brown (NYSE:BRO). The stock’s 37% off its 52-week highs, but I think there are some strong signs for the underlying business.

The insurance broker’s been dealing with two major issues recently: a weak market for insurers and integration costs after a large acquisition weighs on margins.

Both are genuine challenges, but I expect they will prove to be temporary. So I think the two of them combining to push the stock to unusually low levels could be a huge opportunity.

Brown & Brown aims to combine the advantages of local knowledge with the economic benefits of scale. In an industry I think will be durable, that’s a powerful combination.

Investing strategy

One of the things I want from my Stocks and Shares ISA is diversification. And that’s why I’m unwilling to just ignore US stocks even when the S&P 500 as a whole looks risky.

I think Brown & Brown could be set to benefit from a double boost. A more helpful market for insurers could push sales higher while lower integration costs cause margins to expand.

The company’s long-term competitive position also looks strong to me. That’s why it’s still on my ‘to-buy’ list as I look for stocks to scoop up during a tricky time for the S&P 500 and the US economy.