“The last time the S&P 500 had such a high weighting in a single sector (tech) was right before the dot com bubble burst in 2000.”
From Paul LaMonica’s “The S&P 500 is really the S&P 5” posted on CNN Business Tuesday morning:
The S&P 500 is supposed to be a broad representation of the US economy. So if you’re plowing money into an index fund, you might think you’re doing a good job of diversifying your assets.
You’d be wrong. These days, it’s basically the S&P 5.
The five largest companies in the S&P 500 — all tech companies — account for nearly 20% of the market value of the entire index. Apple, Microsoft, Amazon, Google owner Alphabet and Facebook are collectively worth $4.85 trillion. The S&P 500 (SPY) has a market value of around $26.7 trillion.
This could be a big problem for investors who are planning for retirement or other long-term goals who don’t understand the risks of having all their proverbial eggs in one basket…
The last time the S&P 500 had such a high weighting in a single sector (tech) was right before the dot com bubble burst in 2000, according to Tocqueville Asset Management portfolio manager John Petrides.
My take: Yes, but Apple, Amazon, Google and Microsoft are not exactly Pets.com. Facebook I’m not so sure about.