> 2. S&P is heavily weighted towards the strongest companies. Amazon, Apple, Facebook, Microsoft and Google account for 20% of S&P market cap. Most of those companies have been helped by the pandemic, or at least not hurt nearly as bad as smaller companies.
I thought I'd look up the performance of various indexes for the past month (as of the time I looked them up):
* S&P 500: +15.2%
* Dow Jones Industrial Average: +14.1%
* Nasdaq Composite Index: +17.9%
* Russell 2000: +21.7%
* Russel 3000: +16.0%
* Wilshire 5000: +16.3%
I then looked at the YTD, and didn't bother comparing them because they all essentially looked identical to one another.
Note that the DJIA and NDQ are mostly contained within the S&P are they are highly correllated. Weighting aside (I'm not actually sure what differencs their might be), the S&P is contained in R3k and W5000, but not R2k.
So no, I don't think the idea that Apple and Facebook are doing well (thus keeping hte S&P numbers inflated) holds weight. In fact, the Russell 2000 does not include the top 1000 companies (like the Russell 3000) and shows the highest return for the past month.
Rather, it seems like all of these indices are correlated. It reminds me of the Hillary Clinton autoregression of prediction markets during the 2016 election: immune to new information.
> So no, I don't think the idea that Apple and Facebook are doing well (thus keeping hte S&P numbers inflated) holds weight.
The easiest, and best, comparison for this is to look at the S&P 500 vs an S&P 500 equal weighted index (where all stocks are weighted equality, instead of weighted based on market cap). Over 3 months (i.e. just before the market peaked) the equal weighted index is down almost 15%, while the market cap weighted index is down just over 10%. This is clear evidence the larger companies are significantly outperforming the smaller ones.
I thought I'd look up the performance of various indexes for the past month (as of the time I looked them up):
* S&P 500: +15.2%
* Dow Jones Industrial Average: +14.1%
* Nasdaq Composite Index: +17.9%
* Russell 2000: +21.7%
* Russel 3000: +16.0%
* Wilshire 5000: +16.3%
I then looked at the YTD, and didn't bother comparing them because they all essentially looked identical to one another.
Note that the DJIA and NDQ are mostly contained within the S&P are they are highly correllated. Weighting aside (I'm not actually sure what differencs their might be), the S&P is contained in R3k and W5000, but not R2k.
So no, I don't think the idea that Apple and Facebook are doing well (thus keeping hte S&P numbers inflated) holds weight. In fact, the Russell 2000 does not include the top 1000 companies (like the Russell 3000) and shows the highest return for the past month.
Rather, it seems like all of these indices are correlated. It reminds me of the Hillary Clinton autoregression of prediction markets during the 2016 election: immune to new information.