Fun Facts Newsletter | September 2014

The Standard & Poor’s 500 index topped 2,000 in August, setting an all-time high. Much has been written about how hard it is for individuals or professional managers to out-perform the S&P 500 over long time periods. This is a concept to which we subscribe because the S&P 500 Index changes over time to reflect changes in the economy and leading companies.

Here are some examples of changes in the S&P 500 since it reached its last milestone of 1,000 in 1998 to now, compliments of S&P Dow Jones as cited in The Wall Street Journal:

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Company Name Rank in 1998 Rank Now
General Electric 1 8
Coca-Cola 2 19
Merck 5 22
Intel 7 21

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Here are the biggest companies now compared to 1998:

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Company Name Rank Now Rank Then
Apple 1 456
Google 3 Was not public
Berkshire Hathaway 5 Not in the index
Wells Fargo 7 59
General Electric 8 1

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Very importantly, note that Apple was 456th in 1998 but now #1 and is worth $600 billion, over $200 billion bigger than the second largest company, Exxon.

Google just celebrated its 10 year anniversary of having publicly owned stock. One of the many lessons learned is that there are no “stocks that you should buy and hold forever” because then you will be missing the future leaders that may not even exist today. A broad index allows you to participate in our changing economy and list of industry leading companies.

Much is also written about good and bad months to invest in the stock market, in which September has a bad reputation. One has to study these measures carefully. According to Mark Hulbert of the Hulbert Financial Digest, September has had bad losses, but mostly in years when the market has declined year-to-date. This is not the case in 2014 and, historically, when the market has had a gain entering September, then September has been an up month. September has triggered some major down markets, but over the last 60 years twice as many bear markets started in April than in September. So don’t let the month of the year distract you or derail your long term investment plan!

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