The Hateful Eight is 85% of S&P 500 Decline
paulkedrosky.com
paulkedrosky.com
A book I read a few years ago put this more eloquently. Some governor said that 20,000 jobs were created last month and his state contributed half of them. Well, many states lost jobs and the state next door actually gained MORE jobs, so the "more than half" framing makes no sense
Literally the main reason we even have indexes.
> "85% of the decline" doesn't make sense
85% of the decline represented by the overall index.
> so the "more than half" framing makes no sense
It makes perfect sense. It's just misleading.
I think more people need to be talking about the fact that the S&P 500 has extreme concentration risks that didn't exist 15+ years ago (and the Chart of the Day demonstrates that). We're in uncharted territories re: market cap concentration.
The extreme concentration risk lessens as these 8 stocks fall in value compared to the rest.
I also don’t personally see the risk in the concentration. Risk of what? These companies are legitimately larger and doing more business than other firms.
Pick a median consumer. Which company are they sending more profit to than companies like Apple or Amazon?
10 years ago the average consumer maybe bought an iPhone from Apple every 3 years, so they gave Apple less than $100 of pure profit dollars per year.
Now that same consumer is giving Apple money for the iPhone, but also spending on services that they weren’t buying 10 years ago. If they’ve got an Apple One subscription they’re now sending Apple double or triple the profit they used to get.
These companies are big because they sell more things and are more diversified than they were in the past.
There’s no concentration risk. I’d actually argue that the concentration risk can be resolved overnight through antitrust regulation (e.g., force Apple and Amazon to split into multiple companies, as they already have obvious verticals that could stand alone).
I am not the only investor who has taken steps to offset the overly high concentration in the SP500 that raises the riskiness of an investment portfolio. I've done so by splitting my VOO holdings in half, split 50/50 VOO/VTV that strategically diminishes the impact of the high top 10 stocks in the SP500.
One of my main points here is that dumping a lot of money into one company isn't always something that represents lack of diversity in your investment dollars.
A company like Microsoft has its hands in so many business verticals that its stock by itself is a highly diverse asset.
I also think it's important to realize that massive companies like these have inherent advantages over smaller ones. A company like Framework literally cannot make a better laptop than Apple even if an angel investor dropped billions of dollars into their laps. Even if they pulled it off, it wouldn't come with a free trial for Apple's content subscriptions and other revenue-maximizing features, and the wholesale price they get from the factory can't match Apple's margins on the device until they convince a large enough mass of people to buy them.
That's the kind of stuff that big companies can do, and that's why they are worth more putting more bets into than smaller ones.
Obviously, companies like Tesla and Nvidia are far bigger risks in the S&P 500, but they represent a small minority of those giants.
And that’s really my whole point. Someone who is buying an S&P Index fund wants to own more Apple than GoDaddy, because Apple represents much more economic activity than GoDaddy.
Nobody is going to deny enjoying the monetary gains produced by the index becoming concentrated. But it comes at the cost of the portfolio risk that diversification (i.e. absence of concentration) is intended to eliminate.
I’ll make an analogy to maybe help explain what I mean further:
I own a somewhat diverse set of 50 company stocks, at least for the purposes of this exercise.
Let’s say a bunch of those companies merge, now there’s only 20 companies.
No product lines have been discontinued. The companies make all the same things with the same client lists.
Did my investments become less diverse when these companies merged? Perhaps in some ways yes, in many other ways no.
Is my investment portfolio more diverse if I own one stock, Apple, or if I own three stocks, Time Warner, Paramount, and Comcast? All these companies make media content, but Apple is in more industry verticals overall in addition to being a media company (or at least, we can say they are for the purposes of this analogy). If the content industry collapses, Apple is fine, the rest not so much.
Moreover, your examples are crossing over into active investing versus indexing. Indexing theory submits active investors cannot beat indexing over time (Buffet's purchasing/controlling whole companies notwithstanding).
My example is not meant to specifically talk about active investing, I'm just picking out companies to discuss within a hypothetical index holding.
> Intel. Nokia. Blockbuster. Yahoo.
Interesting, 3/4 of these still exist and are doing reasonably well. If you bought their stocks 30 years ago you'd be up on your investment on all of them except for Blockbuster. Obviously, they're not top performers in that timespan (although Nokia ADR pays dividends like other telecoms so maybe it is a good investment in the right index).
You have inadvertently demonstrated some of my point here: companies that serve diverse verticals stick around for decades. For example, Nokia’s consumer business evaporated but their telecom business is still here. See also: BlackBerry.
Citations:
Apollo Academy: S&P 500 Concentration Approaching 50% - https://www.apolloacademy.com/sp-500-concentration-approachi... - March 14th, 2026
> The 10 biggest companies in the S&P 500 make up almost 40% of the index, and if Anthropic, OpenAI and SpaceX are added later this year, the concentration could approach 50%, see chart below. The bottom line is that the S&P 500 basically doesn’t offer much diversification anymore.
Apollo Academy: Extreme AI Concentration in the S&P 500 - https://www.apolloacademy.com/extreme-ai-concentration-in-th... - January 13th, 2026
> The bottom line is that investors in the S&P 500 remain overexposed to AI.
TLDR Concentration risk https://www.finra.org/investors/insights/concentration-risk
(not investing advice)
https://www.thebignewsletter.com/p/monopoly-round-up-the-ira...
Also consider there was a period it took the NASDAQ something like 15 years to recover from a crash after ATH. If your 20 and don't plan to touch it till your 60, whatever. But if you were 55 and looking to capitalize on it at 65, well, zoom out doesn't mean much to you.
Not only does a pull back not really matter in the long term, but it even provides an opportunity to buy more at a lower cost now too!
No.
Dodobrains on r/wallstreetbets?
The basement has never been so salty.
Honestly, it's all clickbait in the end. 'Real' investors are still quietly just plugging their weekly contribution into their 401k week after week without even remembering it.
A matter of perspective.
This is specifically one of those points in stock history where it isn't true; the heavyweights of the S&P 500 are dragging it down while the smaller companies are less affected.
Getting mostly out of hateful 8 hype isn't bad though when they're going down...
https://investor.vanguard.com/investment-products/etfs/profi...
Also some of the recent declines will be due to the war.
https://www.ft.com/content/59adbe42-ca30-47f3-9cda-5415945e9...
15 days of price discovery for SpaceX instead of 1 year for inclusion into indexes. Will be one of the largest wealth transfers from common people to the wealthy since it'll exploit all passive investments to provide exit liquidity for elon and his investors.
I am not the first person to say this, but I guess I took a lot of what he said at face value because I don't really know anything about physics or rockets beyond a high school level. Then he started saying stuff about computers that were "slightly off" at best, and since I know a lot more about computers it made me realize he was kind of full of shit.
I mean we have a president who has almost never even completed an entire sentence, but he tells you how smart he is all the time and people just believe it.
S&P500 inclusion is a simple math calculation based on market cap. By definition, Tesla must be included until its value drops far enough to exclude it. That will probably never happen short of an apocalyptic event.
That said, I agree that TSLA easily meets the criteria for inclusion -- even if you assume a normal automaker P/E of ~5 instead of TSLA's meme-stock ~330.
The stock price is like the price on a restaurant menu. If you're the restaurant owner you don't make money just because you increase the prices on the menu. If you're a diner you don't spend money just by looking at menus in the window.
Boomers already started to burn their $78 trillions in savings. And taxes will skyrocket for the rest to pay their fat unfunded pensions. Oh, and don't forget giving them subsidized/free healthcare. And a last FU, they collude to rise rent (they are the landlord class).
But hey, they never forget to vote.
S&P in general has been giving returns in the past ten years ~12%. Seems like more of the same to me.
Media is ready to lie to you and feed you BS, just waiting order(s) from finance dep.