Changing Index Leadership and the Power of Momentum
This chart highlights how the leadership in the U.S. market — specifically in the Dow or broader indices — evolves every decade. Back in 1985, the big names were IBM, Exxon, GE, GM, DuPont, and Sears. By 1995, Microsoft, Coca-Cola, Johnson & Johnson, and P&G had started to dominate. Then came 2005, bringing in Citibank, Walmart, AIG, and Pfizer. By 2015, tech giants like Apple, Amazon, Facebook, and Google were front and center.
Now, in 2025, the new leaders include Nvidia, Broadcom, Tesla, and others. Some of the older names like Exxon, IBM, Coca-Cola, and Pfizer are no longer at the top — clearly showing that every decade, leadership changes.
This is the beauty of index investing. The index automatically rebalances — removing laggards and bringing in winners. Whether it’s the Dow, S&P 500, or even Nifty, each is essentially a momentum strategy in disguise. Winners get more weight as they grow in market cap, and underperformers get phased out.
The result? A self-correcting portfolio that always aligns with the top-performing companies. Even passive investing through index funds is indirectly following momentum.
This is also why most active fund managers fail to beat the index — because the index itself is dynamic and powerful, already applying momentum principles. To outperform, you’d have to go even deeper — like picking the top 20 strongest stocks from Nifty 50, or filtering based on relative strength within the index.
Momentum continues to be the most consistent factor in factor-based investing, and this long-term shift in index composition makes the case for either sticking with indices or taking it one notch above with systematic momentum strategies.
WeekendInvesting launches – Portfolio Momentum Report
Momentum Score: See what percentage of your portfolio is in high vs. low momentum stocks, giving you a snapshot of its performance and health.
Weightage Skew: Discover if certain stocks are dominating your portfolio, affecting its performance and risk balance.
Why it matters
Weak momentum stocks can limit your gains, while high momentum stocks improve capital allocation, enhancing your chances of superior performance.
