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We’ve written quite a bit about how the S&P 500’s returns can be skewed by the largest stocks. For context you can read all about it here. Today we’d like to provide yet another example. YTD the S&P 500 is up 21%. That’s not to say each of the 500 stocks is up 21%. Rather [...]
Owning a mutual fund or ETF tracking the S&P 500 provides broad diversification, right? After all you’d own 500 stocks. The fallacy is a function of not understanding how a cap-weighted index functions – namely the largest stocks have an outsized impact on returns. This works in both up and down markets. As of Tuesday [...]
When the stock market is going up people pay attention to the index. And what a year the S&P is having. YTD it’s up roughly 20%. When the market is down as it was yesterday people pay attention to the stocks they own. Why? Just because “the market” is up doesn’t mean all stocks are [...]
Lying with numbers is easier than with words. Why? People equate math with science and science with fact. The S&P 500 isn’t lying to us. In fact all statistics below are accurate. We aren’t being lied to but we sure are being misled. Here’s an interesting chart put together by Goldman Sachs: YTD the [...]
After Friday’s jump (credited to the jobs report but, frankly, “pundits” always confuse correlation with causation) the S&P 500 was roughly even YTD. After Mon’s increase the S&P 500 closed positive for the year. That’s right – despite all the handwringing and proverbial jumping out of windows by many investors the S&P 500 is positive [...]
YTD the S&P 500 is up 17.8%. Cool. But is the average stock up 17.8%? Consider the trend in the number of S&P 500 companies reaching new 52-week highs: Notice something? Fewer stocks are participating. Currently about 35 stocks are making new highs. That’s 7% of the companies that comprise the index. The cause? Cap-weighted [...]
There was a time when classification was simple. Coca-Cola sells discretionary consumer goods. J&J is a health care company. Pretty straightforward, right? But what about Comcast? Is it a telecommunications company? Media? Information technology? Semantics to some. Important to others – particularly the investment community insofar as comparisons to benchmarks, diversification, etc require specificity. To [...]
Investment A has a YTD ROR of 6.15%. Investment B has a YTD ROR of 4.32%. Which one is the S&P 500? Answer? Both. How can this be? Investment A was measured using the cap-weighted methodology where the larger the company and stock price the more impact it has. Investment B was measured using an [...]
The good ol’ S&P 500. An index comprised of the 500 largest U.S. stocks as measured by market capitalization. We know it. We love it. It’s everywhere. It’s easy to understand. We can buy funds and ETFs that track it. Let’s take a moment to give the S&P 500 a big hug. We love you [...]
It was a great year for the S&P 500: S&P 500 – up 19% It was a great year for the FAANGs: Facebook - up 53% Amazon - up 56% Apple - up 46% Netflix - up 55% Google - up 35% With such eye-popping returns the FAANGs dominated the list of best-performing S&P 500 [...]