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Five Biggest Stocks Are 23% of S&P 500 Market Cap

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Re: Five Biggest Stocks Are 23% of S&P 500 Market Cap

#11

Post by siliconmountain »

dralley wrote: post #7
1over137 wrote: post #3

Earlier quoted context omitted.

"blindly"? People choose index funds very deliberately, because mutual funds are so much more expensive.

"Blindly" meaning that your average index fund investor has absolutely no idea what's in their portfolio. They are blind investors.

I buy index. I have a portfolio of 500 large American companies, who are publicly traded, and follow SEC regulations, where gross negligence and gross fraud are mostly avoided, and which maybe a third also have global operations.

It’s a basket of restive safe equity, diversified across industry but not much in terms of nationality. Beyond that I don’t know what’s in it and don’t particularly need to care

Re: Five Biggest Stocks Are 23% of S&P 500 Market Cap

#12

Post by refurb »

dralley wrote: post #7
1over137 wrote: post #3

Earlier quoted context omitted.

"blindly"? People choose index funds very deliberately, because mutual funds are so much more expensive.

"Blindly" meaning that your average index fund investor has absolutely no idea what's in their portfolio. They are blind investors.

Sure they know what’s in their portfolio. The entire index.

Re: Five Biggest Stocks Are 23% of S&P 500 Market Cap

#13

Post by JumpCrisscross »

bluedevil2k wrote: post #6

Try the ETF with the symbol "RSP". It's an S&P 500 fund, but each of the 500 is equally weighted. In other words 0.2% of the fund. The theory is that the larger companies in the S&P 500 have less growth potential, or are already overvalued, compared to the smaller companies.

> Try the ETF with the symbol "RSP". It's an S&P 500 fund, but each of the 500 is equally weighted.

Note that an equal-weighted index will tend be more volatile, have higher turnover (i.e. more trading costs and short-term tax effects) and be sensitive to value over momentum in comparison with a market-cap weighted index like the S&P 500. The former have outperformed the latter over the last decade (EDIT: no, it hasn’t. I was looking at a biased source.)

Re: Five Biggest Stocks Are 23% of S&P 500 Market Cap

#14

Post by lotsofpulp »

JumpCrisscross wrote: post #13
bluedevil2k wrote: post #6

Try the ETF with the symbol "RSP". It's an S&P 500 fund, but each of the 500 is equally weighted. In other words 0.2% of the fund. The theory is that the larger companies in the S&P 500 have less growth potential, or are already overvalued, compared to the smaller companies.

> Try the ETF with the symbol "RSP". It's an S&P 500 fund, but each of the 500 is equally weighted. Note that an equal-weighted index will tend be more volatile, have higher turnover ( i.e. more trading costs and short-term tax effects) and be sensitive to value over momentum in comparison with a market-cap weighted index like the S&P 500. The former have outperformed the latter over the last decade (EDIT: no, it has…

Have equal weighted indexes outperformed market cap weighted indexes in the last decade?

Morningstar shows VOO with a greater total return than RSP for past 5 years and since inception. I didn’t see past 10 years at a quick glance, but I imagine it’s the same.

Re: Five Biggest Stocks Are 23% of S&P 500 Market Cap

#15

Post by bryanlarsen »

lotsofpulp wrote: post #14
JumpCrisscross wrote: post #13

Earlier quoted context omitted.

> Try the ETF with the symbol "RSP". It's an S&P 500 fund, but each of the 500 is equally weighted. Note that an equal-weighted index will tend be more volatile, have higher turnover ( i.e. more trading costs and short-term tax effects) and be sensitive to value over momentum in comparison with a market-cap weighted index like the S&P 500. The former have outperformed the latter over the last decade (EDIT: no, it has…

Have equal weighted indexes outperformed market cap weighted indexes in the last decade? Morningstar shows VOO with a greater total return than RSP for past 5 years and since inception. I didn’t see past 10 years at a quick glance, but I imagine it’s the same.

The argument is that the top five are overvalued. If so they would have outperformed during the period they became overvalued.

Re: Five Biggest Stocks Are 23% of S&P 500 Market Cap

#16

Post by postingawayonhn »

bryanlarsen wrote: post #5

The addition of Tesla in a few weeks will bring this metric down a little bit. Tesla will be a top ten stock but not a top five stock.

It'll be number 6 (assuming you treat the two classes of Google shares as one company like the source has).

Re: Five Biggest Stocks Are 23% of S&P 500 Market Cap

#18

Post by jzwinck »

refurb wrote: post #10
bluedevil2k wrote: post #6

Try the ETF with the symbol "RSP". It's an S&P 500 fund, but each of the 500 is equally weighted. In other words 0.2% of the fund. The theory is that the larger companies in the S&P 500 have less growth potential, or are already overvalued, compared to the smaller companies.

How often does the fund get rebalanced? That’s the nice thing with the market cap weighted SP500 funds, no tax consequences from rebalancing. But you could plug “RSP” into a tax-advantaged account. Edit: You can owe taxes even if you don’t personally buy/sell. As a fund shareholder, you could be on the hook for taxes on gains even if you haven't sold any of your shares. https://investor.vanguard.com/investing/taxes/m…

What personal tax consequences arise from rebalancing within an index fund?

Re: Five Biggest Stocks Are 23% of S&P 500 Market Cap

#19

Post by htfy96 »

JumpCrisscross wrote: post #13
bluedevil2k wrote: post #6

Try the ETF with the symbol "RSP". It's an S&P 500 fund, but each of the 500 is equally weighted. In other words 0.2% of the fund. The theory is that the larger companies in the S&P 500 have less growth potential, or are already overvalued, compared to the smaller companies.

> Try the ETF with the symbol "RSP". It's an S&P 500 fund, but each of the 500 is equally weighted. Note that an equal-weighted index will tend be more volatile, have higher turnover ( i.e. more trading costs and short-term tax effects) and be sensitive to value over momentum in comparison with a market-cap weighted index like the S&P 500. The former have outperformed the latter over the last decade (EDIT: no, it has…

My preference would be holding normal SPY and hedge the overweighted NASDAQ stocks with short NQ futures. In this way you only need to rebalance the NQ futures which benefits from 60/40 rule with better tax rate.

Re: Five Biggest Stocks Are 23% of S&P 500 Market Cap

#20

Post by [deleted] »

lotsofpulp wrote: post #14
JumpCrisscross wrote: post #13

Earlier quoted context omitted.

> Try the ETF with the symbol "RSP". It's an S&P 500 fund, but each of the 500 is equally weighted. Note that an equal-weighted index will tend be more volatile, have higher turnover ( i.e. more trading costs and short-term tax effects) and be sensitive to value over momentum in comparison with a market-cap weighted index like the S&P 500. The former have outperformed the latter over the last decade (EDIT: no, it has…

Have equal weighted indexes outperformed market cap weighted indexes in the last decade? Morningstar shows VOO with a greater total return than RSP for past 5 years and since inception. I didn’t see past 10 years at a quick glance, but I imagine it’s the same.

[deleted]
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