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A comment on Five Biggest Stocks Are 23% of S&P 500 Market Cap. Parent comment

Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by JumpCrisscross on Monday November 30, 2020 @09:04AM (#25253771)
> Try the ETF with the symbol "RSP". It's an S&P 500 fund, but each of the 500 is equally weighted.

Note that an equal-weighted index will tend be more volatile, have higher turnover (i.e. more trading costs and short-term tax effects) and be sensitive to value over momentum in comparison with a market-cap weighted index like the S&P 500. The former have outperformed the latter over the last decade (EDIT: no, it hasn’t. I was looking at a biased source.)

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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by dgrin91 on Monday November 30, 2020 @09:54AM (#25254319)
To put the nail in the coffin, take a look at a comparison between the two: https://www.google.com/finance/quote/.INX:INDEXSP?sa=X&ved=2...

Historical performance of RSP has always lagged behind SPX

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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by beezle on Monday November 30, 2020 @10:05AM (#25254452)
That is not true at all. RSP has for many years outperformed SPX over many different time horizons. It really is not until 2019 that there is a significant underperformance which also coincides with the outsized top 10 market caps.

ref: https://stockcharts.com/freecharts/perf.php?RSP,SPY

change the window size to whatever time horizon you want.

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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by lotsofpulp on Monday November 30, 2020 @09:11AM (#25253840)
Have equal weighted indexes outperformed market cap weighted indexes in the last decade?

Morningstar shows VOO with a greater total return than RSP for past 5 years and since inception. I didn’t see past 10 years at a quick glance, but I imagine it’s the same.

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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by JumpCrisscross on Monday November 30, 2020 @10:01AM (#25254395)
> Have equal weighted indexes outperformed market cap weighted indexes in the last decade?

No, it hasn’t. I had a bad source. Thank you.

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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by bryanlarsen on Monday November 30, 2020 @09:14AM (#25253874)
The argument is that the top five are overvalued. If so they would have outperformed during the period they became overvalued.
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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by lotsofpulp on Monday November 30, 2020 @09:19AM (#25253938)
I was replying to JumpCrisscross’s comment.
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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by bryanlarsen on Tuesday December 01, 2020 @10:45AM (#25266133)
And I was responding to the thread, not to you specifically.
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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by anotherman554 on Monday November 30, 2020 @09:18AM (#25253916)
I don't know why you would limit your dataset to the last decade. That doesn't seem a valid analysis, even though it might be easier to lookup with free tools online.
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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by lotsofpulp on Monday November 30, 2020 @09:20AM (#25253948)
I was replying to JumpCrisscross’s claim about performance, which specified the last decade between equal weighted and market cap weighted indices.
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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by htfy96 on Monday November 30, 2020 @09:16AM (#25253903)
My preference would be holding normal SPY and hedge the overweighted NASDAQ stocks with short NQ futures. In this way you only need to rebalance the NQ futures which benefits from 60/40 rule with better tax rate.
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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by beezle on Monday November 30, 2020 @10:12AM (#25254521)
The 60/40 rule cuts both ways. You are also subject to daily market to market cash/margin drawdowns.

It is probably easier to just buy RSP and then buy virtually any 'market' or tech etf/mutual fund to round up the top 10-20% weighting as you want it. The reason I say any will do is that there is little difference in the holdings of most of the etfs and funds.

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Re:Five Biggest Stocks Are 23% of S&P 500 Market Cap by bluedevil2k on Monday November 30, 2020 @10:03AM (#25254428)
Note, it’s an ETF so there’s no tax consequences directly on the buyer until it’s sold.
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