Episode 500: The S&P 500 Index and the Decade Ahead

Money For the Rest of Us

J. David Stein

Economy, Economics, Investing Podcast, Business, Investing

4.3 • 1.3K Ratings

🗓️ 6 November 2024

⏱️ 31 minutes

🔗️ Recording | iTunes | RSS

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Summary

In the 500th episode of Money for the Rest of Us, we focus on the S&P 500 Index. How has the index changed, and why have U.S. stocks performed so well? Will U.S. stocks only return 3% in the next decade, as Goldman Sachs predicts.

We also discuss major themes covered on Money for the Rest of Us over 500 episodes and what are our plans for the future. Thanks for being a part of Money for the Rest of Us over the past decade.

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Show Notes

Select Sector Indices Consultation on Constituent Weightings Calculations – Results—S&P Global

What Does an Election Year Mean for the Market?—S&P Global

The Great Rotation: A potential unwinding of hyper-concentration in the US may favor balanced global portfolios by Brian Chingono—Verdad

The Great Rotation (Part 2): The United States’ outsize weighting in commercial indices appears unjustified by its share of global GDP by Brian Chingono—Verdad

Decade of Big S&P 500 Gains Is Over, Goldman Strategists Say by Sagarika Jaisinghani—Bloomberg

David Stein LinkedIn Post—LinkedIn

Vanguard warns investors over company stake limits by Steve Johnson, Will Schmitt, and Brooke Masters—The Financial Times

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Transcript

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0:00.0	Welcome to Money for the Rest of us. This is a personal finance show on money, how it works,
0:05.8	how to invest it, and how to live without worrying about it. I'm your host, David Stein,
0:11.5	and today is episode 500. It's titled The S&P 500 Index and the decade ahead. We were talking at money for the rest of us. What should we do
0:23.1	for the 500th episode and couldn't really come up with anything because we don't just want to
0:29.2	sit back and talk about what we did. We'd rather talk about what's going on now. Brett, though,
0:35.3	had the suggestion, well, why don't you talk about the S&P 500
0:38.9	index on our 500th episode? And that's what we're going to do, because there's a lot of elements
0:45.4	within the S&P 500, how well it's performed, how it's constructed, where things are, how it
0:51.9	might do going forward, that very much tie into the themes that we've
0:56.0	talked about over the years on money for the rest of us. I'll certainly talk about the show a little
1:01.3	bit, provide some perspective later in this episode, but let's first take a look at the SMP.
1:06.3	Standard and Poor's organization was formed in 1941 through a merger of standard statistics and PORS organization was formed the 1941 through a merger of standard statistics and
1:14.1	PORS publishing. The S&P 500, which is a measure of the 500 largest stocks in the U.S.
1:22.1	by market capitalization or size, that was launched March 4, 1957. It was the first index to use a computer-based
1:32.3	calculation to track the performance. You need a computer to figure out the weights, which is why
1:37.3	earlier indexes, I believe, generally were price-weighted because it was easier to calculate.
1:43.4	The Dow Jones Industrial average, for example,
1:45.8	was a price weighted index. The S&P 500 replaced an earlier 90 stock composite that the S&P had.
1:54.8	Now, if we think back to how the SP 500 has done since the first episode of money for the rest of us.
2:02.8	That was May 16th, 2014.
2:06.2	Since then, through yesterday, November 4th, the S&P 500 index has returned 267% cumulative.
2:16.0	That's 13.2% annualized. We're using the I shares core S&P 500 ETF as a proxy.
	...

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