The U.S. Stock Market Has Been Doing Better Than Most Stocks That’s a confusing concept, but it is reality. Over the latest five years, as measured by the Standard & Poor’s 500 Index, the stock market has gained 106%. The S&P 500 Index is generally considered to be a good representation of the U.S. stock market as a whole, but it most certainly is not. Why? Because five companies (Apple, Amazon, Microsoft, Facebook, and Google) combine to make up nearly a quarter of the index. As these five go, so goes the index. If this index is viewed with all companies measured on an equal basis, the net result for the period drops to 87%. The comparison is even more striking when we divide the S&P universe into large cap, midcap, and small cap companies. (Cap is short for market capitalization, which is the total value of all shares of a company.) Over the latest five years, the gain in large caps was 171% compared to 84% for midcaps and 77% for small caps. Thi
Investment and economic observations by N. Russell Wayne, CFP, MBA. Mr. Wayne is the president of Sound Asset Managment, inc. and former Managing Editor of The Value Line Investment Survey.