I’ve made that comparison (S&P500 to mutual fund) many times over the years. Not only is it like a mutual fund, but it outperforms 99+% of all mutual funds over the long-term. The S&P500 “fund” managers must be really good at what they do. I’m mostly kidding, they basically pick the biggest companies and assign them weights based on capitalization.
Mungofitch back tested equal weight S&P 500 back as far has he had data. He said it out performed by a non-trivial amount, but he didn’t say what his exact methodology was.
I’ve often thought an annual rebalance might be better because it seems like your punishing your winners each quarter.
It has performed the best lately. And if you want to drill down, the S&P 10 beat the S&P 100 this year.
[quote=“MarkR, post:21, topic:108124”]
Not only is it like a mutual fund, but it outperforms 99+% of all mutual funds over the long-term. [/quote]
Which is the beauty of just holding index. You become an elite investor by doing nothing.
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Companies in the S&P 500 reported 10% year-over-year EPS growth in Q2, the highest in more than 2 years. They also reported expanding margins: Evercore’s Julian Emanuel. For the first time in five consecutive quarters, YoY EPS growth expanded from the Mag 7 to the S&P 493.
While we cannot shake the impending recession fear, the numbers are strong. I am open to a possibility that we are in the middle of a bull run, that may last few more years, with time-to-time pullbacks, but the market will keep going up.
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Here are some indicators that tells you why the above is wrong.
- 0 new low’s in SP500
- 41 stocks in sp500 are at All time high
These are not the conditions of bear market, rather a strong bull market.
More money is lost in search of a crash or waiting for bear market.
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4 Sectors Industrials, Utilities, Financials and Healthcare are hitting new highs.
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