Comment by cj
3 hours ago
> The fundamental reason S&P 500 exists is to let people buy the entire market
And why do people want to buy the entire market in the first place? They want to diversify and insulate themselves from a single company crashing their portfolio value.
What are people afraid of right now? They're afraid of a single company crashing their portfolio value.
Why are people afraid of their portfolio value crashing? Because these 3 companies will fundamentally increase the overall risk and volatility of the index.
Do you see the problem?
The problem is people equating S&P 500 with "set and forget" investment when that's never what it was. It's an index. You're not paying anyone to balance it with a particular risk profile.
There are indexes that invest equal amounts of money into all companies, so Nvidia doesn't dominate. Or you can pick low growth high dividend indexes to insulate against AI. Or just grab Vanguard LifeStrategy if you don't want to think.
The current situation is unusual. No index can handle all situations. Either adapt or use a fund that does the thinking for you, right?
People use the dollar in business becaUse its a stable currency.
If the US does something to destabilize the dollar, will economists be running around saying “the dollar was never intended to be used for that purpose!”? No.
It doesn’t really matter if the index “wasn’t supposed” to be something it became. The problem is the same. The only difference is who you blame.
The current situation is unusual and the standard rules handled it fine. For some reason they're changing the rules. That's not "no index can handle all situations." It's a deliberate, harmful change.