Magnificent 7 makes up 31% of SP500 !! WTF were you thinking, SP500?

schizo

schizo

WTF were those dumbass at SP500 thinking? With so much weight given to Magnificent7, it might be good when the Mag7 is going up, but when they tank, it will completely kill the market, if not the entire economy.

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schizo said:
WTF were those dumbass at SP500 thinking? With so much weight given to Magnificent7, it might be good when the Mag7 is going up, but when they tank, it will completely kill the market, if not the entire economy.

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how dare those bozos run a market cap weighted index. It’s their fault all the investors keep bidding those stocks.
 
newwurldmn said:
how dare those bozos run a market cap weighted index. It’s their fault all the investors keep bidding those stocks.
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In the aggregate, no one particular stock should be given more than 5% weight (and I think that's even too much). Otherwise, this can pose a systemic risk if things go south.
 
schizo said:
In the aggregate, no one particular stock should be given more than 5% weight (and I think that's even too much). Otherwise, this can pose a systemic risk if things go south.
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In addition, no one sector should be given more than 10% of the weight of the index.

S&P 500 was originally designed to gauge the economy as a whole, so it should be equal-weighted among all sectors across the entire spectrum.

But as it stands currently, that ain't so. The breakdown of sectors in the S&P 500 is as follows:
  • Technology: 28.1%
  • Health care: 13.3%
  • Consumer discretionary: 11.8%
  • Financials: 11.5%
  • Communication services: 9.6%
  • Industrials: 8%
  • Consumer staples: 6.2%
  • Energy: 3.7%
  • Real estate: 2.6%
  • Materials: 2.6%
  • Utilities: 2.6%
And here's the breakdown for 2023.

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Another mag 7 stock announcing sad earnings


Msft earnings were pathetic, considering how much this stock has catapulted the last 6 months. Numbers were nothing but blah, eps beat by hair along with revenue and no numbers on co pilot along with cloud numbers being weak.
 
Holy crap what a ridiculous concentration of risk.

I'm going to rotate more out of SP500 funds and more into SP500 "value" to cut my exposure to super high PE ratio unicorns.

I wonder how many people have 30% of their retirement funds concentrated in 7 stocks and don't even know it.
 
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