A recent table from Bloomberg as of July 1 reveals interesting insights into the performance of the S&P 500. In 2024 so far, the S&P 500 has risen by 14.5%. Looking back, 2023 saw a rise of 24.2%. This pattern continues through various years, showing consistent growth in the index.
Contribution of Top 10 Stocks
The middle column of the table shows the percentage of the S&P 500’s performance contributed by the top ten stocks. In 2024, the top ten stocks contributed a significant 77.2% of the total 14.5% performance. In 2023, the top ten stocks contributed 68% of the 24% performance. In 2020, they contributed 58.9%. This data is sorted by the percentage of performance given by the top ten out of 500 stocks, clearly showing a trend.
Shift in Recent Years
In the past, lower percentages of top ten contributions were more common. However, recent years have seen a shift. The contribution from the top ten stocks has become much more significant. For example, in 2021, it was 45%, and it has only increased since then. This change indicates that the performance of the S&P 500 is now heavily reliant on its top ten stocks.
Implications for Investors
This trend means that unless investors have a focused strategy targeting these top performers, it will become increasingly difficult to beat the index. The S&P 500’s performance is being driven by these top stocks, while the other 490 stocks contribute less. To outperform the index, investors need to select stocks that are strong performers and likely among the top few names.
To outperform the index, focusing on the top-performing stocks is crucial. For instance, strategies like Mi NNF10 or Mi India Top 10 at Weekend Investing focus on these top names. By concentrating on these strong performers, investors can eliminate the weaker stocks in the index, which may drag down performance. This selective approach allows for better returns compared to holding an index ETF or mutual fund that includes all 500 stocks.
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