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30 Jul 2020

Market Metrics: S&P 500 Index

We are currently in the midst of the COVID-19 Pandemic, consumer sentiment has dropped materially (26.3% in United States) and yet the Standard and Poor’s 500 Index which measures stock price performance of 500 large listed companies in the United States is going in the other direction.


The big driver has been the information technology companies which is now 27.5% of the S&P 500 Index as at 30 June 2020 and this is largely due to FAANGM (Facebook, Apple, Amazon, Netflix, Google and Microsoft) which have increased over 500% in the past 7 years and are again rebounding since the -37% crash in March 2020.

The other big driver has been the United States Federal Reserve which has been buying billions of dollars of corporate bonds since 22nd March 2020 under The Secondary Market Corporate Credit Facility (SMCCF) and so is helping companies to stay afloat.

Click for charts.

So what do we do about this disconnect? Nothing because as Benjamin Graham taught, don’t speculate.

Instead, remain invested according to your appetite for volatility and when fear and panic take hold again, then react by buying more quality assets at discounted prices.


At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.

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