10 Interesting facts about the S&P500

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pkcrafter
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10 Interesting facts about the S&P500

Post by pkcrafter »

Ten facts about the S&P500, Article 2013.

Take a guess--how many original stocks are still in the S&P500? Post your guess--no peeking :happy

http://www.fool.com/investing/general/2 ... he-sp.aspx

Paul
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Re: 10 Interesting facts about the S&P500

Post by poker27 »

pkcrafter wrote:Ten facts about the S&P500, Article 2013.

Take a guess--how many original stocks are still in the S&P500? Post your guess--no peeking :happy

http://www.fool.com/investing/general/2 ... he-sp.aspx

Paul
I don't even know when the s&p was formed, but I know companies like kodak and Packard bell were probably in it at one point.

I'd say less than 20.
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Re: 10 Interesting facts about the S&P500

Post by poker27 »

poker27 wrote:
pkcrafter wrote:Ten facts about the S&P500, Article 2013.

Take a guess--how many original stocks are still in the S&P500? Post your guess--no peeking :happy

http://www.fool.com/investing/general/2 ... he-sp.aspx

Paul
I don't even know when the s&p was formed, but I know companies like kodak and Packard bell were probably in it at one point.

I'd say less than 20.
Well I was way off. I thought it was started well before whatever the heck date it was.
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Re: 10 Interesting facts about the S&P500

Post by fourwedge »

50? is my guess. reading the article next!
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Re: 10 Interesting facts about the S&P500

Post by red5 »

50...
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Re: 10 Interesting facts about the S&P500

Post by SpaceCommander »

I don't know much about the S&P500 other than it's cap weighted meaning that it's overweight the most expensive stocks and underweight the cheapest ones. :)
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Re: 10 Interesting facts about the S&P500

Post by JoMoney »

SpaceCommander wrote:I don't know much about the S&P500 other than it's cap weighted meaning that it's overweight the most expensive stocks and underweight the cheapest ones. :)
I don't think cap weighted means what you think it means.
If you're going to say that it's "overweight" or "underweight" at least explain what the baseline is that you're comparing it to.
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Re: 10 Interesting facts about the S&P500

Post by nisiprius »

pkcrafter wrote:Ten facts about the S&P500, Article 2013.

Take a guess--how many original stocks are still in the S&P500? Post your guess--no peeking :happy

http://www.fool.com/investing/general/2 ... he-sp.aspx

Paul
I'm taking my guess without peeking. The S&P 500 began in 1957, and it includes many substantial-but-not-gigantic medium-sized companies that are more or less in one business (even into the 1970s it was common for companies to have a name that suggested a single business they were in). A lot of -onics companies and Nifty Fifty companies bit the dust, a lot of companies merged... My guess is somewhere between 1/4 and 1/2, between 125 and 250.

Usually, the behavioral economists say, we not only are wrong, but we are far too overconfident and when asked to pick a range of error, invariably pick too narrow a range, so the real number almost always falls outside it. So let me call that my "bold guess" and say I will be quite surprised if it is less than 50 and quite surprised if it is more than 350. In other words, if it's in the range 125-250 I will be smugly proud, if it is outside the range 50-350 I will seriously need to give myself a dope-slap.

OK, I've peeked but won't say anything more.
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Re: 10 Interesting facts about the S&P500

Post by ZumZabo »

nisiprius wrote:
pkcrafter wrote:Ten facts about the S&P500, Article 2013.

Take a guess--how many original stocks are still in the S&P500? Post your guess--no peeking :happy

http://www.fool.com/investing/general/2 ... he-sp.aspx

Paul
I'm taking my guess without peeking. The S&P 500 began in 1957, and it includes many substantial-but-not-gigantic medium-sized companies that are more or less in one business (even into the 1970s it was common for companies to have a name that suggested a single business they were in). A lot of -onics companies and Nifty Fifty companies bit the dust, a lot of companies merged... My guess is somewhere between 1/4 and 1/2, between 125 and 250.

Usually, the behavioral economists say, we not only are wrong, but we are far too overconfident and when asked to pick a range of error, invariably pick too narrow a range, so the real number almost always falls outside it. So let me call that my "bold guess" and say I will be quite surprised if it is less than 50 and quite surprised if it is more than 350. In other words, if it's in the range 125-250 I will be smugly proud, if it is outside the range 50-350 I will seriously need to give myself a dope-slap.

OK, I've peeked but won't say anything more.
I have not peaked and will take a much lower IQ approach and guess 225. A little less than half. I have not heard a slap yet.
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Re: 10 Interesting facts about the S&P500

Post by dbCooperAir »

I would say less than 1/2 for sure, put me down for 100-125 companies left.
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Re: 10 Interesting facts about the S&P500

Post by dbCooperAir »

Furthermore, calculations by noted Prof. Jeremy Siegel of the Wharton School demonstrate that purchasing each original company and holding them for those 50 years (included those that went through bankruptcy, buyout, or index removal) as compared with just buying an index fund would have netted you a better return of 88 basis points per year. That might not sound like a lot, but if you invested $1,000 in each strategy in 1957 you'd have made $84,000 more with the individual buy-and-hold strategy than with a straight index fund purchase. Let this be another reminder that buying and holding solid companies at reasonable prices is still the way to go for a happy retirement.
Anybody going to take that bet today, all evidence points that's its better to hold individual stocks then to buy the index :wink:
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Re: 10 Interesting facts about the S&P500

Post by pkcrafter »

Nisiprius wrote:
Usually, the behavioral economists say, we not only are wrong, but we are far too overconfident and when asked to pick a range of error, invariably pick too narrow a range, so the real number almost always falls outside it. So let me call that my "bold guess" and say I will be quite surprised if it is less than 50 and quite surprised if it is more than 350.
Hmm, an investor who actually applies what he learns. :!: :wink:

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Re: 10 Interesting facts about the S&P500

Post by livesoft »

On the other hand, the highest P/E ever recorded occurred during the recent financial meltdown (May 2009), reaching an astronomic level of 123.79.
Consider that March 2009 was the low, May 2009 was not a bad time at all to be buying, though March and April were better.
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Re: 10 Interesting facts about the S&P500

Post by Rodc »

Speaking of streaks and interesting patterns, since 1928 the S&P 500 has had more than 50 instances where it's advanced at least eight days in a row.
Pretty good for an index started in 1957...
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Re: 10 Interesting facts about the S&P500

Post by heyyou »

The S&P was a total market index adding members until it out grew 500, and the committee then decided to stop expanding the number of members. My unresearched guess is 10% residual, 50 companies.

Wasn't the initial index, started early in the 20th century? Somewhat like the Dow, it was the price of a handful of the dominant railroad stocks.
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Re: 10 Interesting facts about the S&P500

Post by JoMoney »

heyyou wrote:The S&P was a total market index adding members until it out grew 500, and the committee then decided to stop expanding the number of members. My unresearched guess is 10% residual, 50 companies.

Wasn't the initial index, started early in the 20th century? Somewhat like the Dow, it was the price of a handful of the dominant railroad stocks.
Standard Statistics and Poors Publishing were involved with various financial publishing, ratings, etc. for a long time. They had lots of indexes measuring various things.
The lineage of the S&P500 (started in 1957) is usually associated with the first "daily priced' U.S. focused 90-stock composite price index introduced in 1926 by Standard Statistics.
http://www.standardandpoors.com/about-s ... ine/en/us/

The methodology of what goes into the index has changed over time, but the objective of tracking the U.S. stock market is predominately the same. By some reports, the choice of making it 500 stocks was to reduce the impact AT&T had on the index because of it's massive size at the time. I cant find it at the moment, but there is a speech by John Bogle that includes a graphic showing the weighting of the top-ten stocks in the S&P500 back in the 1950's, it was considerably larger (something like 50% of the overall market was in the top 10 stocks).
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Re: 10 Interesting facts about the S&P500

Post by SpaceCommander »

JoMoney wrote:
SpaceCommander wrote:I don't know much about the S&P500 other than it's cap weighted meaning that it's overweight the most expensive stocks and underweight the cheapest ones. :)
I don't think cap weighted means what you think it means.
If you're going to say that it's "overweight" or "underweight" at least explain what the baseline is that you're comparing it to.
I think we both know exactly what I meant there. Judging from your many insightful posts here, you seem to be a well informed chap. Cap weighted indexes systematically overweight the most expensive stocks and underweight the cheapest. That's how they're designed. Some would say that's a fatal flaw. However, the advantage with them is that trading costs are virtually nil. So differently weighted indexes have transactional headwinds to overcome in order to match cap weighted ones. In the end, cap weighted indexes perform admirably despite their counter-intuitive construction.
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Re: 10 Interesting facts about the S&P500

Post by Gropes & Ray »

Maybe some car makers, telephone companies and oil companies are still around? My guess is 37.
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Re: 10 Interesting facts about the S&P500

Post by rkhusky »

SpaceCommander wrote:
JoMoney wrote:
SpaceCommander wrote:I don't know much about the S&P500 other than it's cap weighted meaning that it's overweight the most expensive stocks and underweight the cheapest ones. :)
I don't think cap weighted means what you think it means.
If you're going to say that it's "overweight" or "underweight" at least explain what the baseline is that you're comparing it to.
I think we both know exactly what I meant there. Judging from your many insightful posts here, you seem to be a well informed chap. Cap weighted indexes systematically overweight the most expensive stocks and underweight the cheapest. That's how they're designed. Some would say that's a fatal flaw. However, the advantage with them is that trading costs are virtually nil. So differently weighted indexes have transactional headwinds to overcome in order to match cap weighted ones. In the end, cap weighted indexes perform admirably despite their counter-intuitive construction.
Cap weighting means that you own more of stocks that everyone else thinks are good and less of those stocks that everyone else thinks are not as good.

Equal weighting has logical issues with stock splits and mergers. For example, if a multinational company that has 100 brands, decides to split all the brands into separate companies, should you now increase your allocation to those brands 100-fold?
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Re: 10 Interesting facts about the S&P500

Post by pkcrafter »

Rodc wrote:
Speaking of streaks and interesting patterns, since 1928 the S&P 500 has had more than 50 instances where it's advanced at least eight days in a row.
Pretty good for an index started in 1957...
Now THAT is an interesting fact!

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Re: 10 Interesting facts about the S&P500

Post by pkcrafter »

SpaceCommander wrote:I don't know much about the S&P500 other than it's cap weighted meaning that it's overweight the most expensive stocks and underweight the cheapest ones. :)
Commander, the S&P500 floats all boats equally. A company that has a market cap 2x another company in the index gets 2x more of your invested dollar. So, investments are equal when compared to the company size. If each company got the same amount of the dollar you would be investing in an equal-weighted index. That index overweights smaller companies with no rational other than they are smaller.


Paul
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Re: 10 Interesting facts about the S&P500

Post by Rodc »

Cap weighted indexes systematically overweight the most expensive stocks and underweight the cheapest. That's how they're designed. Some would say that's a fatal flaw.
The problem with that logic is the following.

Company A has sales of X and profits Y and 1000 shares that sell for $Z.

Company B has sales of 2X and profits of 2Y and 1000 shares that sell for $2Z.

B is in every way twice as big a company and "Pound for pound" exactly as profitable. So of course it has twice the market cap. What else would you want?

Presumably most of the time this is basically what is going on with market cap - just a reasonable assessment of the value of the company.

Now once in a while, The Tech Bubble comes to mind, this goes haywire and you might get something like you imagine. But markets are mostly rational and it is hard to trade on the occasion they are not (though some folks do manage, hard but not impossible).
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Re: 10 Interesting facts about the S&P500

Post by Tamales »

nisiprius wrote:The S&P 500 began in 1957...
So, when you download the Shiller data that lists price, dividend, and earnings for the S&P composite back to 1871, what exactly is it really showing?

Here are a few other fun facts on the S&P, from MerrillLynch:
The S&P 500 had negative real price return in nearly 1 out of every 2 years since 1871 [again wondering what the S&P500 is here, if it's only been around since 1957]
Following prior secular tops in 1907, 1929 and 1968 stocks in real terms took 20-30 years to reach new highs. Today, less than 15 years from the last peak in Aug’2000, US stocks in real terms are just 4% from all-time highs.

There have been 11 bear markets in the S&P 500 since 1929.
 The longest (1946-1949) lasted 37 months, the shortest (1990) lasted 3 months.
 The magnitude of both the most recent bear market (-57%) and the subsequent equity price recovery (204% in 69 months) were exceeded only once before, during the 1929-34 period.
 The average trailing P/E ratio since 1900 is 14.6X,so today’s ratio of 17.9X* is 22% above the long-run average.
 The all-time P/E high was 29.7X in June 1999.
 The all-time low was 5.9X in June 1949.

 The cheapest years to buy equities were 1916 to 1917, 1948 to 1950, 1974 and 1980. During these years the S&P 500 could have been bought for a trailing P/E ratio of less than 7X.
The S&P 500 dividend yield hit an all time high of 9.6% in 1932.
 The S&P 500 dividend yield hit an all-time low near 1.1% in 2000.
 At the end of 2014 the dividend yield was 1.95%.
 Dividend yields are well below their long-term average of 4.2%.

The inflation adjusted S&P 500 dividend yield hit an all-time high of 18.9% in 1931.
 The inflation adjusted S&P 500 dividend yield hit an all-time low of -11.4% in 1946.
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Re: 10 Interesting facts about the S&P500

Post by 610gpm »

75

Now I will look.
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Re: 10 Interesting facts about the S&P500

Post by SimpleGift »

Tamales wrote:So, when you download the Shiller data that lists price, dividend, and earnings for the S&P composite back to 1871, what exactly is it really showing?
From The Hidden History of the S&P 500:
  • • S&P originally tracked 233 stocks, but it was too hard to maintain daily or hourly quotes on that many stocks before computers, so the S&P 90 was created in 1928.  The S&P 90 was 50 industrial stocks, 20 railroad stocks, and 20 utility stocks, and performance data was made available as often as hourly. S&P also kept track of the original 233 stocks, but reported on them weekly.

    • The original S&P 500 (in 1957) was 425 industrial stocks, 60 utilities, and 15 railroads. All 500 were listed on the New York Stock Exchange (NYSE). The 500 stocks covered roughly 90% of the total market value of the entire market.

    • In 1976, the composition changed to 400 industrials, 40 utilities, 40 financials, and 20 transportation stocks. It is amazing that financials were not included until the mid 1970’s! Many financial stocks traded over the counter (OTC), which had previously made them harder to incorporate.  Transports now included airlines, freight, and trucking companies instead of just railroads.

    • In 1988, the 400-40-40-20 model was finally abandoned to make the index more responsive to changes in the economy. This old fixed model proved un-adaptive in a fast paced economy.
Many more details can also be found here: History of the Standard & Poor's 500.
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Re: 10 Interesting facts about the S&P500

Post by ram »

10 to 20 % of the initial list is my guess.
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Re: 10 Interesting facts about the S&P500

Post by basspond »

325.

I only hear of several a year that are bumped from the list.
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Re: 10 Interesting facts about the S&P500

Post by pkcrafter »

610gpm wrote:75

Now I will look.
verrrry close.


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Re: 10 Interesting facts about the S&P500

Post by Rodc »

So, when you download the Shiller data that lists price, dividend, and earnings for the S&P composite back to 1871, what exactly is it really showing?
Sounds like a nice little Google project as to how that reconstruction was performed. I recall, hazily, that the Fama-French reconstruction of the data they use back to 1926 had startlingly few companies back that far and almost certainly has a lot of survivorship bias due to the difficulty of finding complete records.

Not to mention back to 1871 the notions of corporation and stock market were not nearly as developed as it is today so very unclear that even a complete reconstruction back that far is very useful.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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