A version of this post was originally published on TKer.co.
I’m guessing you’ve seen a valuation chart that looks something like the one below.
If you haven’t, the message is simple: Five stocks (Facebook,¹ Apple, Amazon, Microsoft, and Google²) account for about a quarter of the market capitalization of the S&P 500, which consists of 500 companies.
This is because of their massive market values: Apple is worth $2.8 trillion, Microsoft is worth $2.4 trillion, Google is worth $1.8 trillion, Amazon is worth $1.6 trillion, and Facebook is worth $876 billion.
For context, the 20 smallest companies in the S&P 500 are each worth less than $10 billion.
The idea that 1% of the companies in the index account for about 25% of the total market value is jarring, and some folks see that as a vulnerability…
