Wall Street vs. Main Street
The recent stock market rally has many investors excited about the major indexes reaching new highs. What is not reflexed is the reality of the broader to the rest of the economy. The S&P 500 is considered a better representation of the market compared to the Dow Jones because the S&P 500 simply provides a wider market view. The investor can check on 500 stocks not the 30 in the Dow. This means a far better overall view, right?
As it turns out, no. The bulk of the S&P 500’s success during the pandemic is largely related to less than 10 stocks, mainly the FANG stocks. This stands for the dominate blue chip stocks in the S&P 500, Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Alphabet (aka Google) (GOOG).
As noted by Jonas Elmerraji in the The Street, as if August 12 of this year, the average return of the bottom 490 stocks in the S&P 500 is down 3.4%. A search of the bottom 50 stocks on the S&P 500 reveal only 5 are in positive territory. Of the other 45 stocks, which account for less than 0.1% of the S&P 500. Several companies, names such as Marathon Oil and Nordstrom, are down over 60%.
How does this translate to the average business? How does this translate to the average person? More importantly, does this mean you are benefitting from the booming market? Perhaps what happens on Wall Street stays on Wall Street.
the Java Exchange 