Subject: Mega Cap Outperformance
The largest companies (by market cap) had higher returns last year. 2024 returns:
34% for the largest 50 companies (XLG Invesco S&P 50 ETF)
31% for the largest 100 companies (OEF iShares S&P 100 ETF)
25% for the largest 500 companies (SPY SPDR S&P 500 ETF)
14% for the equal weight S&P 500 (RSP Invesco S&P 500 Equal Weight ETF)
Mega cap stocks have increased market cap share recently. As a percentage of the S&P 500, the largest 10 S&P 500 companies produced 29% of profits last year and finished with 40% of market cap. The largest 50 companies claimed 62% of S&P 500 market cap in 2024. This was common before 1976, and happened briefly in 2000 with a peak of 62% in March 2000.
largest 50
decade Average pctMC
1950's 63%
1960's 61%
1970's 59%
1980's 47%
1990's 49%
2000's 52%
2010's 49%
2020's 56%
The largest 50 companies produced about 54% of S&P 500 net income between 2005 and 2024. The market cap share increased from about 50% to 63% in the last 10 years, while the profit share remained around 54%.
largest 50 largest 50
decade Average pctMC Average pctNI
1990's 49% 47%
2000's 52% 61%
2010's 49% 53%
2020's 55% 52%
average average
years pctMC pctNI
2024 59% 52%
2005 to 2024 51% 54%
1987 to 2024 50% 53%
2000 59% 42%
1987 to 1998 48% 47%
Going forward, AI investments might drive relative performance. If the massive ($100B) investments pay off, a few companies might get most of the gains. There was more concentration after 2000 (with pctMC increasing from 48% to 51%, and pctNI increasing from 47% to 52%).
S&P500 S&P50
Date R&D[$M] pctIncrease R&D[$M] pctIncrease
20191231 313,335 200,707
20201231 346,410 11% 228,732 14%
20211231 399,741 15% 270,890 18%
20221230 461,134 15% 300,484 11%
20231229 525,661 14% 378,138 26%
20241230 655,817 25% 422,726 12%
Spending on R&D as a percentage of sales has increased since 2009.
S&P500 S&P50
Date R&D/Sales R&D/Sales
20241230 3.8% 6.4%
20231229 3.3% 6.6%
20221230 3.1% 5.5%
20211231 3.0% 5.6%
20201231 3.0% 5.6%
20191231 2.6% 4.8%
20181231 2.5% 4.7%
20171229 2.4% 4.4%
20161230 2.4% 4.3%
20151231 2.2% 3.8%
20141231 2.0% 3.3%
20131231 1.9% 3.0%
20121231 1.8% 2.8%
20111230 1.8% 2.5%
20101231 1.8% 2.4%
20091231 1.8% 2.6%
20081231 1.5% 2.1%
20071231 1.6% 2.2%
20061229 1.5% 2.1%
20051230 1.5% 2.2%
20041231 1.5% 2.3%
20031231 1.5% 2.4%
20021231 1.5% 2.2%
20011231 1.6% 2.3%
20001229 1.7% 3.1%
19991231 1.7% 3.5%
19981231 1.6% 2.4%
19971231 1.4% 1.9%
19961231 2.1% 3.1%
19951229 2.0% 2.8%
19941230 2.0% 2.9%
19931231 2.1% 2.9%
19921231 2.0% 2.6%
19911231 2.0% 2.9%
19901231 2.0% 2.9%
=== links ===
Subject: Foreign exposure
"Why is the US market expensive? The simplest response is "prices fluctuate". There has been almost no penalty for buying dips for a long time, so the market ratchets upwards till something breaks. More subtle answers come from macroeconomics: other things being equal, or even approximately equal, it's pretty much an identity that a rising government deficit will cause corporate profits to soar, which of course causes people to want to own more equities... The S&P 490 (all but big 10) manages to produce only 2/3 of the total S&P 500 profits."
https://www.shrewdm.com/MB?pid...
The Most Hated Stocks in the World, Posted December 22, 2024
"Investors hate international stocks, emerging market stocks and value stocks for a reason. The companies at the top of the S&P 500 and Nasdaq 100 are, frankly, better businesses. They’re outperformed in the stock market because they’ve outperformed on business fundamentals. Maybe large cap growth now has overtaken what was the small cap value premium in the past."
U.S. stocks have gained profit share along with market share. US as % of Global: Profits 55%, Market Cap 65%.
https://awealthofcommonsense.c...
http://gtr1.net/2013/?~Mega10N...
http://gtr1.net/2013/?~NiftyFi...
http://gtr1.net/2013/?~NiftyFi...
http://gtr1.net/2013/?~NiftyFi...
http://gtr1.net/2013/?~NiftyFi...
http://gtr1.net/2013/?~NiftyFi...