The Marketbeat page has a snippet about Sandisk being added to the S&P 500. It questions whether Standard & Poors is chasing heat ala 1999 and 2000 when the index was chock full $200 billion companies that had only been public for ten minutes.
I do not know if it is as bad as that but it makes sense to wonder if the make up of the SPX is shifting and if a beta of 1.00 might have a slightly different meaning.
One way to look at is that S&P is buying tech. If you look at from that point of view you would then ask "should I be on the other side of the trade or not?"
The initial reaction is probably that S&P has it wrong but I'm not sure that is universally correct.
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2 comments:
I like your insight on the changing meaning of "Beta of 1.0". However, if volatility has been diving over the past few years, adding more "speculative" names might actually just be keeping beta closer to what it meant in the past. (At least for now).
great point.
the difference, and you point this out, is that the market took out volatility and now S&P is putting it back in.
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