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Teacherman1 (57.31)

The S & P - Then and Now

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December 03, 2009 – Comments (3)

I don't usually pay much attention to the S&P other than as an indicator of general market sentiment, but was curious about something.

I know there have been a number of changes over the past year, year and a half, two years; but don't really know it there has been a significant number of stocks removed with others added.

If it has been a significant number, how would this affect the comparision of where the S&P was then, to where it is now?

It would take someone with a whole lot more time and technical expertise than I have to do a meaningful analysis ot this, but would be very interested in seeing what it might reveal.

Are we comparing apples to apples, or apples to oranges? Has it gone up as much as it seems from its low point, or down as much as it seems from its high point?

When we see comments like "it has run up too much and is poised for a correction", or that  "it has lots more room to run": are these assumptions based of a false comparison to what was, or is it reasonable to assume that the S&P as it is constitued today, is the same as it was constituted then. When ever then was.

If anyone is up to the challenge,  I would love to see what you find.

Notice that I did not volunteer to do this work.

Have a nice evening. 

 

3 Comments – Post Your Own

#1) On December 03, 2009 at 11:16 PM, rd80 (98.41) wrote:

Since the S&P 500 is market weighted and the changes are from lower cap stocks falling out as former mid-caps grow in, the impact on the index from stocks moving in and out isn't that big.  

In the S&P500 today, the ten biggest companies account for 20% of the index.  The biggest company, XOM, accounts for 3.7% of the index value by itself.  Assuming a fairly even spread in market cap among the bottom half of the index, XOM alone has more weight than the bottom 145 stocks.

Over the past couple of years, there should have been a decrease in financial weighting in the index as big bank market caps shrunk and companies like Wachovia, Bear Stearns and Lehman disappeared. 

That's all the work I'm volunteering for.

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#2) On December 04, 2009 at 12:04 AM, HarryCarysGhost (99.70) wrote:

Just from memory I know that Devry was recently added to replace one of the financials. No noticeable effect.

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#3) On December 04, 2009 at 11:44 AM, lemoneater (77.01) wrote:

Good question, Teacherman.

What I would like to know is who were Standard & Poor's? "Poor" seems a misnomer for the S&P :).

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