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#1
06-29-2007, 10:39 PM
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Why is the S&P 500 considered \"The Market\"?
In the investment world, one's performance is always compared to the market. Why do we consider the S&P 500 to be the market? Wouldn't the Wilshire 5000 or some other larger index be a better representation of the market since the S&P doesn't include small-caps? I realize that certain funds that invest in specific asset classes compare themselves to the appropriate benchmark indeces. Thanks in advance for the clarification.
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#2
06-29-2007, 11:41 PM
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Re: Why is the S&P 500 considered \"The Market\"?
S&P 500 is considered a good benchmark because historically it has beaten over 75% of the other funds out there. You can always find funds that beat it over the short-term, but it is hard to find funds that consistently beat it over the long-term.
A well-educated investor can probably beat it, but for the average joe, it the S&P 500 fund is a great investment.
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#3
06-29-2007, 11:58 PM
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Re: Why is the S&P 500 considered \"The Market\"?
The S&P is market cap weighted. The biggest stocks account for most of the market. The other 4500 combined probably isn't close to as much capitalization as the biggest 500.
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#4
06-30-2007, 12:13 AM
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Re: Why is the S&P 500 considered \"The Market\"?
[ QUOTE ]
The S&P is market cap weighted. The biggest stocks account for most of the market. The other 4500 combined probably isn't close to as much capitalization as the biggest 500. [/ QUOTE ] yeah 2% of the largest stocks account for 20% of the value and 10% of the stocks for 50%.
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#6
07-01-2007, 03:45 PM
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Re: Why is the S&P 500 considered \"The Market\"?
[ QUOTE ]
S&P 500 has a 99% correlation with the U.S. Stock Market since 1972(As far back as I have S&P 500 data). [/ QUOTE ] How is the "U.S. Stock Market" defined here and why isn't that used as the benchmark?
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#7
07-01-2007, 04:24 PM
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Re: Why is the S&P 500 considered \"The Market\"?
[ QUOTE ]
[ QUOTE ] S&P 500 has a 99% correlation with the U.S. Stock Market since 1972(As far back as I have S&P 500 data). [/ QUOTE ] How is the "U.S. Stock Market" defined here and why isn't that used as the benchmark? [/ QUOTE ] a holdover tradition from the days when compiling that much data was much more difficult and time-consuming than today, i would guess.
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#8
07-01-2007, 05:31 PM
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Re: Why is the S&P 500 considered \"The Market\"?
[ QUOTE ]
[ QUOTE ] S&P 500 has a 99% correlation with the U.S. Stock Market since 1972(As far back as I have S&P 500 data). [/ QUOTE ] How is the "U.S. Stock Market" defined here and why isn't that used as the benchmark? [/ QUOTE ] My data on U.S. Stock Market represents >99% of the market capitalization.
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