A Tale of Two Markets

July 24, 2020

Michael Jamison, Portfolio Manager


According to Goldman Sachs, there is currently a record concentration of market cap in the 5 largest stocks. Microsoft, Apple, Amazon, Facebook and Google account for 22% of the total market cap of the S&P 500 while the remaining 495+ stocks make up the other 78%.

The following chart demonstrates that since January, 2020 and through the end of Q2, these five stocks were up an average of 32%. The remaining 495+ stocks in the index tell a much different story as they were down nearly -7%.

If we look at the S&P 500 on a cap-weighted basis, we see the average stock in the S&P 500 was down about -1% over the same time-period. When you remove these 5 stocks from the S&P 500 index, it’s clear that many large cap U.S. stocks have done little more than tread water. In other words, the overall market is not doing nearly as well as the S&P 500 currently indicates.

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