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Six stocks, four of which don’t pay a dividend, account for 99% of the YTD gain in the S&P 500. The top ten holdings in the S&P 500 account for 23% of the market capitalization of the index. Netflix, a company projected to burn $3 billion in cash this year and Amazon, a company that trades at 83X estimated earnings, have a market value that is almost as large as the entire S&P 500 Utilities and Telecom sectors.
What’s more valuable to you, Prime delivery and bingeing Netflix, or electricity and phone service?
The S&P 500 has become a top heavy index dominated by stocks that have no place in the portfolios of investors in or nearing retirement.
CNBC’s Michael Sheetz reports:
Amazon, Netflix and Microsoft together this year are responsible for 71 percent of S&P 500 returns and for 78 percent of Nasdaq 100 returns.
The three stocks make up 35 percent, 21 percent and 15 percent of S&P 500 returns, respectively, while making up 41 percent, 21 percent and 15 percent of Nasdaq 100 returns.
Apple also makes up a large portion of both indexes, contributing 12 percent of both S&P 500 and Nasdaq 100 returns, while Alphabet and Facebook contributed 8 percent to each.
Read more here.
Jeremy Jones, CFA
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