The origins of the phrase “what’s up?” date to the mid-nineteenth century, with attributions of the expression being used as far back as 1813 in English works of fiction. It subsequently has made its way into the slang of Bugs Bunny and even a 1999 Super Bowl ad from Budweiser.
On Wall Street and in the financial sector, the question may garner a response of an individual sector, or an individual asset class, on any given day. Though investors gauge the market as being up or down based on index measurements, when combing through the weighting of the Nasdaq 100 and S&P 500, the same five companies – Apple, Microsoft, Alphabet, Amazon, and Tesla – make up a large portion of the weighting and drive the overall bulk of the movement within the two indexes.
Though there are many potential criticisms to be made about the oblique corporate and bargaining power these huge companies wield, the performance of the Nasdaq year-to-date, -33.5%, against its equally weighted portfolio’s performance of -29.3%, and the S&P 500 performance year-to-date of -24.7% against the equally weighted S&P 500’s performance of -20.4%, depicts that it is not always the thoroughbreds that win the race.
Adam Hetts, global head of portfolio construction and strategy at Janus Henderson Investors, told Markets Group equal-weight outperformance occurs despite the sheer institutional power these companies hold. “The capitalization-weighted approach is currently…
