Re: Correlation of S&P 500 with Russell 3000
PredictableChaos
6/8/2011 1:34:27 AM
Ann,
Link works and thanks for showing us how you did the comparison. S&P isn't identical with the others, but tehy are much, much closer than I would have expected and this remains true for a variety of times. Here's the YTD -
Russell 1000 in Blue - S&P 500 in Red - Russell 3000 in Green
Re: Correlation of S&P 500 with Russell 3000
Ann Logue
6/7/2011 5:18:23 PM
For the first quarter of 2011, the Russell 3000 had a total return of 6.38% while the narrower but large-cap Russell 1000 returned 6.24%. Meanwhile, the S&P 500 returned 6.60%.
Ann - From the data you provided for 1Q11, these indices seem strongly correlated. My sense is that the divergence is larger for different or longer periods of time.
Do you have data to illustrate if this is true?
Re: How relevant is the Stock market(and by extension the S&P 500 to the US economy???
Ann Logue
4/29/2011 5:45:38 PM
To people who invest, it's important. To people who hold mutual funds, will receive pensions, are covered by life insurance, go to churches that have endowments, or receive scholarships to go to college, the stock market matters, even if they do not have a direct investment in it.
How relevant is the Stock market(and by extension the S&P 500 to the US economy???
back2basicz
4/28/2011 2:31:35 PM
Ann,
Sorry to sound contradictory here-But how important is the Stock market(any stock market for that matter) to the 80%+ Americans who have ZERO stakes in stocks???
The Stated Aim of QE1 and QE2 was to raise Stock market valuations which would help make the less than 20% Americans who own stocks richer so as to get them to go on a spending spree and help power the US Economy ahead.
Unfortunately nothing of that sort has happened so far.
So returning back to the question at hand-How important is the S&P 500 really???
Regards
Ashish.
Re: Re : Does the S&P 500 Still Measure the Market?
Ann Logue
4/26/2011 5:42:04 PM
What I'm suggesting is that this explains the gap between the S&P 500 and U.S. GDP - that the profitability of U.S. companies and the health of the U.S. economy are not one and the same.
"When Chrysler was acquired by Daimler in 1998, it was removed from the S&P because it was no longer a U.S. company. Ford and GM were already in. There was no obvious replacement. So, the powers that be decided to add Yahoo!"
DOH! Exactly my point!
Re : Does the S&P 500 Still Measure the Market?
yalanand
4/26/2011 4:37:56 PM
"Whether the company is Exxon Mobil (NYSE: XOM), Apple Inc. (Nasdaq: AAPL), or General Electric Co. (NYSE: GE), those in the S&P 500 draw revenue from all over the world."
@Ann,
You are suggesting that those companies which draw revenue from all over the world doesn't represent the US, but the fact is evenutally most of the revenue is routed back to US. How should it matter if the revenue is generated in US or outside US ?
Re: What's the strategy
Ann Logue
4/26/2011 3:53:04 PM
I think it's partly a popularity contest and partly an attempt to anticipate how the economy is changing. If there is an economic sector that's growing, the S&P will want it represented, but only if there is a suitable and well-performing company to add.
In some cases, there isn't an obvious company to add. When Chrysler was acquired by Daimler in 1998, it was removed from the S&P because it was no longer a U.S. company. Ford and GM were already in. There was no obvious replacement. So, the powers that be decided to add Yahoo!. It was neither automotive nor manufacturing, but it was a well-performing stock that represented where the economy was going.
The S&P favors stocks that have already done well, so it's buying high when it adds a name to the index.
Re: S&P: Chasing the peformance
Value Hiker
4/26/2011 3:36:48 PM
Scott:
Interesting post about the link to the historical S&P weights on different industries. For simple contrarian, it seems that investors shall sell Energy, and buy Consumer Discretionary, Telecom, and materials.
However, if you do a little bit more research, maybe Telecom deserves less weight on SPY because their market shares are quickly devoured by other technology firms. Companies like Lucent, Nortel, AT&T etc, are far less important than decades ago
Materials was badly affected by slow house market, until the house market picks up, they will stay at the historical bottom for a while.
Consumer Discretionaries are affected by current long recession, but I thought their positions are improved since 2010. I am not sure the current reflect 2011 year, maybe it means 2009?
To be a smart contrarian, I may want to add my positions on Materials, and Consumer Discretionaries.
The blogs and comments posted on Investor Uprising do not reflect the views of Investor Uprising, PRNewswire, or its sponsors. Investor Uprising, PRNewswire, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
|
 |
Latest Blogs
Telecom-equipment maker Ciena is a stock trader’s dream, as long as the timing is correct.
The FTC is offering a $50,000 cash prize to the person or group that can come up with a solution to those annoying robocalls.
Akamai is in the middle of four significant tech trends.
John Malone of Liberty Media will be taking over Sirius XM satellite radio when the existing CEO Mel Karmazin steps down. What's it mean?
Demand for students of the humanities exists, despite widespread aspersions on the discipline.
IU Education
Resources to help you become a better investor
Investor Uprising on Twitter
25 market-moving companies we're tracking
|
Tweet This