Feature and not a bug all depends on valuations….
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When the S&P was down last year, was that measurement also primarily due to just a few of their heavily waited companies?
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agip wrote:
this is it wrote:
The vast majority of folks (including myself) have their money in a cap weighted fund, so unless you are one of those niche investors who have all your money in an equal weight S&P500 fund this seems like a non issue. The index is cap weighted and it's always been cap weighted which means it gains and losses have always been driven primarily by the largest cap companies in the index. It's a feature, not a bug.
it's a spectrum. You are essentially correct but there are still gradients inside that truth.
Now is one of the most extreme situations where just 7 or so stocks have provided the lion's share of returns in the SP500. Extremes like this are worth noting.
And anyway, the SP500 is an index that follows just big cap US. It's not a diversified index. I'd guess indices that follow the other thousands of US stocks not megacap are lagging well behind, with half the return or less. And we should own those indices since we should have diversified portfolios.
That said, agreed that one reason market cap indexing works is that it owns the big massively profitable companies that historically drive the indices. It's all on a spectrum.
As of today the Russell 2000 is up 7% ytd, the midcap 400 is up 6% (I own both), so yeah trailing the S&P 500 but not still not bad for a 6 month return. I just think the concern about cap weighting is overblown, to me it sounds like cope from stock pickers who are staring at another year of failing to beat the index.
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this is it wrote:
agip wrote:
it's a spectrum. You are essentially correct but there are still gradients inside that truth.
Now is one of the most extreme situations where just 7 or so stocks have provided the lion's share of returns in the SP500. Extremes like this are worth noting.
And anyway, the SP500 is an index that follows just big cap US. It's not a diversified index. I'd guess indices that follow the other thousands of US stocks not megacap are lagging well behind, with half the return or less. And we should own those indices since we should have diversified portfolios.
That said, agreed that one reason market cap indexing works is that it owns the big massively profitable companies that historically drive the indices. It's all on a spectrum.
As of today the Russell 2000 is up 7% ytd, the midcap 400 is up 6% (I own both), so yeah trailing the S&P 500 but not still not bad for a 6 month return. I just think the concern about cap weighting is overblown, to me it sounds like cope from stock pickers who are staring at another year of failing to beat the index.
I agree with you.
And if you look at the list I posted yesterday of companies in the S&P 500 and their YTD returns, a whopping 92 of them have YTD returns exceeding 20%.
Here's the list - quite a few companies are doing really well, esp. since this is only the first half of the year.
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seattle prattle wrote:
this is it wrote:
As of today the Russell 2000 is up 7% ytd, the midcap 400 is up 6% (I own both), so yeah trailing the S&P 500 but not still not bad for a 6 month return. I just think the concern about cap weighting is overblown, to me it sounds like cope from stock pickers who are staring at another year of failing to beat the index.
I agree with you.
And if you look at the list I posted yesterday of companies in the S&P 500 and their YTD returns, a whopping 92 of them have YTD returns exceeding 20%.
Here's the list - quite a few companies are doing really well, esp. since this is only the first half of the year.
It would be interesting to do a back-test and see how an equal weight S&P 500 fund would have performed over the last 20 years vs a traditional cap weight. My guess is that the cap weight would win by a country mile. The only reason I even have 3 equity index funds is because there isn't a total market fund in my 401k, if that was available it's the only stock fund I would own. I've never tried to beat the market, I'm just happy to tag along for the ride.
This post was edited 26 seconds after it was posted.20 -
this is it wrote:
seattle prattle wrote:
I agree with you.
And if you look at the list I posted yesterday of companies in the S&P 500 and their YTD returns, a whopping 92 of them have YTD returns exceeding 20%.
Here's the list - quite a few companies are doing really well, esp. since this is only the first half of the year.
It would be interesting to do a back-test and see how an equal weight S&P 500 fund would have performed over the last 20 years vs a traditional cap weight. My guess is that the cap weight would win by a country mile. The only reason I even have 3 equity index funds is because there isn't a total market fund in my 401k, if that was available it's the only stock fund I would own. I've never tried to beat the market, I'm just happy to tag along for the ride.
You would be wrong.
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la gente esta muy loca wrote:
this is it wrote:
It would be interesting to do a back-test and see how an equal weight S&P 500 fund would have performed over the last 20 years vs a traditional cap weight. My guess is that the cap weight would win by a country mile. The only reason I even have 3 equity index funds is because there isn't a total market fund in my 401k, if that was available it's the only stock fund I would own. I've never tried to beat the market, I'm just happy to tag along for the ride.
You would be wrong.
Well dammit, that shows how much I know eh? I thought about using portfolio visualizer but for some reason I didn't think there was an equal weight fund that had been around for that long.
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Remember this guy? Bet $1m that we'd have hyperinflation in three months. Now is three months. We didn't have hyperinflation. BTC is the same now as it was then. He lost the bet. (he later admitted it was a publicity stunt to make people aware of the money printing).
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the MOVE index got a lot of press over the past year...it apparently threw a false signal in March 2023, just before the SP500 rallied 11%.
Game of Trades
@GameofTrades_
There’s a lot of optimism in the current stock market rally as investors jump onto the QE bandwagon
But the MOVE index is sending a strong warning signal
The last time this happened, equities saw a sharp drawdown11:30 AM · Mar 17, 2023
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96.2K
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Another one on the sharp drop in stocks one year ago and how that kind of drop usually means the market is in for strong returns.
Worked again!
I think the best point here is not that this indicator picked the bottom...but it picked a good point to enter. The market did go lower, but here we are a year later up 18%.
Jonathan Harrier, CMT
@jonathanharrier
$SPX $SPY Today the portion of S&P 500 stocks at their 52-week low hit 42%. Levels above 40% are rare (N = 9 since 1985) and point to significantly better days ahead. Odds-on for more drawdowns to endure, but this is essentially capitulation. Fwd data in table & following 👇11:47 AM · Jun 16, 2022
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Another 52 week high.
dare I say it?
are these the good times?30 -
agip wrote:
Another 52 week high.
dare I say it?
are these the good times?They seem to be the repeat of the huge drop at the advent of Covid pandemic., which is similar in that it was a slow relenting of all those on the sidelines realizing that the rebound did have legs. If what I hear in the press is true, there is still a lot of negative sentiment out there and fears of 2nd quarter downturn, so we may see the rebound continue as banking fears, inflation worries, and threats of a recession recede - all of which portends yet more buying back in.
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Ghost of Igloi wrote:
Igy - I have a lot more respect for you than I do for John Hussman. Please tell me why I should click on that link. And also tell me why Hussman has such a dismal investing record. The market is a-rocking (and don't come knocking!) but his recent record really sucks.
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hoo boy the vix had a 13 handle for a bit today. That's a 'once every few years' number.
the CNN greed and fear index is at extreme greed.
what a mighty rally.
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agip wrote:
hoo boy the vix had a 13 handle for a bit today. That's a 'once every few years' number.
the CNN greed and fear index is at extreme greed.
what a mighty rally.
Oh, sure, believe tainted sources like CNN. Are you afraid of questioning the narrative? Are you? Why doesn't your sources include Zero Hedge, Norseman Trader, and Hussman tweets?
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Sally Vix wrote:
Ghost of Igloi wrote:
Igy - I have a lot more respect for you than I do for John Hussman. Please tell me why I should click on that link. And also tell me why Hussman has such a dismal investing record. The market is a-rocking (and don't come knocking!) but his recent record really sucks.
Inquiring minds want to know when you will pan CDs and cheer the Dow again?
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seattle prattle wrote:
agip wrote:
hoo boy the vix had a 13 handle for a bit today. That's a 'once every few years' number.
the CNN greed and fear index is at extreme greed.
what a mighty rally.
Oh, sure, believe tainted sources like CNN. Are you afraid of questioning the narrative? Are you? Why doesn't your sources include Zero Hedge, Norseman Trader, and Hussman tweets?
Those Russians at Zerohedge were working overtime while the Democrats created the Steele Dossier. And four years later our now Secretary of State Anthony Blinken asked 51 former intelligence officers to sign a letter saying the Biden Laptop was Russian disinformation.
That said, John Hussman is a big Democratic donor, and that has never stopped me from enjoying his research. Pretty sure Sven Heinrich has similar political leanings.
This post was edited 2 minutes after it was posted.03 -
seattle prattle wrote:
Oh, sure, believe tainted sources like CNN. Are you afraid of questioning the narrative? Are you? Why doesn't your sources include Zero Hedge, Norseman Trader, and Hussman tweets?
Because he would prefer to be right.
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Ghost of Igloi wrote:
seattle prattle wrote:
Oh, sure, believe tainted sources like CNN. Are you afraid of questioning the narrative? Are you? Why doesn't your sources include Zero Hedge, Norseman Trader, and Hussman tweets?
Those Russians at Zerohedge were working overtime while the Democrats created the Steele Dossier. And four years later our now Secretary of State Anthony Blinken asked 51 former intelligence officers to sign a letter saying the Biden Laptop was Russian disinformation.
That said, John Hussman is a big Democratic donor, and that has never stopped me from enjoying his research. Pretty sure Sven Heinrich has similar political leanings.
Honestly, Igy, I remember when that Steel Dossier thing emerged a few years ago and I am fairly confident I remember this correctly, but it raised some eyebrows initially and was quickly dismissed as unsubstantiated. It didn't amount to anything. I am sure there are others who could expand on this, but it certainly seemed like it was given credence until it could be examined and dismissed, and it was.
The Blinken thing, I would eagerly look forward to hearing more about it in credible news sources, who I am confident will cover it if it amounts to anything at all.
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