Entry #4

     Blog entry #4

    Hello and today I will be talking about another trending topic. I will talk about how the S&P 500 index fund and how it may have become overly saturated into the top ten companies. This is a trending topic because a lot of people own the S&P500 so this would be devastating if this was a bubble. A lot of American's would lose a lot of money. So many would be financially in ruins so today I will talk about the signs of this. 

Picture via: St louis fed
    First, I would like to talk about what the S&P 500 is. The S&P500 is a collection of the top 500 companies in the USA weighted by market cap. These means by buying the fund you can own a little piece of the top 500 companies in the USA. It also adjust every so often without creating a taxable event. This means that you can buy a fund that constantly picks winners without being taxed. This is very helpful because a lot of people suck at picking individual stocks. according to CNBC around 70-90% of people lose money.

    Next I would like to talk about how the S&P 500 is basically on the back of 7 companies. These companies are Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, and Tesla. These are often referred to as the magnificent 7. They make up 37% of the fund. This has increased so much in the last ten years. According to the Motley Fool the magnificent 7 made up just 12.3% of the S&P 500. 

    In conclusion I think the fund that was supposed to diversify has ended up not working. All of these factors are something to watch as the market seems to be heating up. Our economy seems like its on false stilts. This is an important measure to watch. I hope you enjoyed this little piece on how our stock market seems to be built on 7 stocks in the S&P500. 

Comments

  1. AlecNovember 16, 2025 at 6:19 PM

    This blog does a good job of breaking down the S&P500 funds into an understandable issue. You used data, got the actual numbers and stats to highlight your point and make it clear. Raising awareness about this investment provides valuable insight that can help people make better financial decisions.

    ReplyDelete
  2. Ahmed AliNovember 17, 2025 at 11:48 PM

    Hi Nicholas, very interesting post! It makes sense why some might see this as a bit of a trick — the S&P 500 was supposed to diversify, but now it heavily depends on the “Magnificent 7.” I believe only those who truly understand this structure and the associated risks can benefit from it. For most people, it is a good reminder to be cautious and not assume the fund is risk-free. Thank you for sharing!

    ReplyDelete
  3. Prof. MurphyNovember 21, 2025 at 12:17 PM

    You've provided some helpful background and context here, Nicholas. What. is the larger point that you want to make in this post? Is it to raise your reader's concern about the imbalance of the S&P500? Help us to better understand how the failure of diversity might impact us?

    ReplyDelete

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