No. of Recommendations: 20
So then I had another thought. What about _just_ the top 10 of the S&P500, in proportion to their wright?
Did you try that in the decades prior to, say, 2015?
e.g., top 5 by market cap equal weight 1986-2012 inclusive underperformed the cap weight S&P by a rather remarkable 4.0%/year.
Just because something has been observed a lot recently doesn't make it a law of nature : )
I'm not saying the super-giga-caps are a bad bet right now. Who knows? It's only a few firms, and they have their own idiosyncratic futures.
But I'm very confident that they aren't a good bet today just *because* they are the super-giga-caps. Historically, if you know nothing else, that's a group that's a bad bet. If something is both very big and overvalued, that's where it will be found.
Jim
