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Concerning SPY and concentration in top 5 holdings

Anyone know if the concentration of holdings in a relative few companies is historically significant? I know the index is cap weighted but is todays concentration out of the ordinary? Thanks for your replies.

Comments

  • define "historically significant". as in significant to some kind of predictive power about future returns?
  • @Devo. I am curious if today’s concentration is meaningfully higher than its historical average. Not trying to use that info to predict future returns.
  • Yes its meaningfully high. highest ever perhaps. twitter has a lot of charts on all this but I haven't figured out how to paste a chart into MFO discussions yet:(
  • AAPL Apple Inc 7.52%
    MSFT Microsoft Corp 6.97%
    AMZN Amazon.com Inc 3.07%
    NVDA NVIDIA Corp 2.66%
    GOOGL Alphabet Inc 2.09%
    GOOG Alphabet Inc 1.83%
    META Meta Platforms Inc 1.68%
    BRK.B Berkshire Hathaway Inc 1.65%
    TSLA Tesla Inc 1.57%
    UNH UnitedHealth Group Inc 1.30%
    XOM Exxon Mobil Corp 1.20%

    That's 31% (I am including both classes of Google and so all in 11 tickers make the top 10).
  • edited June 2023
    Top 5 now are 21.95% of SP500 (M* data; combining GOOG & GOOGL, 2 classes of the same Alphabet).
    An old chart from December 2021 Twitter LINK.

    image
  • Thanks for your responses. One cannot help noticing the peak at 2000.
  • Another way is to check the ratio of SPY:RSP (market-cap vs equal-weight SP500).
    https://stockcharts.com/h-sc/ui?s=SPY:RSP&p=D&yr=5&mn=0&dy=0&id=p51538998466
  • Thanks
  • Devo said:

    Yes its meaningfully high. highest ever perhaps. twitter has a lot of charts on all this but I haven't figured out how to paste a chart into MFO discussions yet:(

    Putting Twitter images here is easy because they have links at Twitter; otherwise, you will have to use an image hosting site that is more complicated.

    Steps for Twitter Images:

    1. Right-click on image at Twitter and click "Copy image address" for image URL (DO NOT click "Copy link address" or "Copy image").
    2. In your MFO post, click on the MFO Image-tool in the menu bar above (3rd from right) and paste the URL.
    3. Done!

    Additional step
    4. To credit the Twitter poster, I also link to the Twitter post. You can get that URL from right-click on the time/date field.
    FWIW, some Twitter images don't include any logos or source, and the image URL belongs to Twitter, so any attribution is easily lost. I have seen accusations flying on Twitter on who stole what from whom. So, I ALWAYS include image + Twitter post link.

    Sometimes, MFO doesn't grab the image in the 1st attempt, then use post Edit to repeat steps #1 & #2 above.

    Above steps apply to any image that has an URL in an image format (.jpg, .png, etc).

    For images on your PC only, upload to an image hosting site (free ImgBB, etc). That creates an image URL, then just use steps #1 and #2 above.

    Try posting some related image here.

  • Thank you @ybb
  • edited June 2023
    Image test passed, Fini .
  • larryB said:

    Anyone know if the concentration of holdings in a relative few companies is historically significant? I know the index is cap weighted but is todays concentration out of the ordinary? Thanks for your replies.

    Not responsive to your specific question, but I have spent a few hours the last few weeks comparing RSP vs IVV and IVE, also VONE vs VONV, also the gaming value outliers SCHD and DIVO and CAPE.

    While looking hard at UI.

    Even VONE all by itself has a breadth that (as you might think) counters the top-heavy IVV. Counters meaning underperforms.

    5-3-1y and 8mos. I use M* and Fido to do longer comparisons, as they exist.

    Anyway, if I were really smart I would be able to convey what the lessons are which I have learned. IVV or VONE in combo w low-UI DIVO looks like a winner. He said.
    (How's this for unhelpful?)
  • @Davidrmoran. I am at the end of long and profitable relationship with SCHD. Would you be willing to share what you learned about the “value outlier? I understand a bit of how the index works and am fascinated by how the algorithm seems to have lost its mojo after a long and sorta steady run. Thanks in advance.
  • @larryB,

    haha, what you said:

    >> fascinated by how the algorithm seems to have lost its mojo after a long and sorta steady run

    only the tired 'value' lesson of 'works until it doesn't'

    Also like CCOR; that defunct growth-over-value thing of recent loser yore; and so much else

    Waiting for DIVO (which I do not own yet) to stall.

    There should be an etf called MOJO.

    Bloomberg has a recent article whose hed is something like 'SP500 tech heaviness is a feature, not a bug'; maybe it's been posted or pointed to already.
  • edited June 2023
    Yay! Thank you for your help.
  • correction indicator :)

    For many years my father had an investment timing / trend analysis service whose most beautiful feature was his individual (per client) hand-drawn and -colored moving averages serving as graphics for his nicely written newsletter. That is some swing in the WSJ poll.
  • That is the AAII Sentiment Survey (weekly) history posted by the WSJ.
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