Pension recovery performance 2020

Linton

Another area where I do not understand your model is:
Many years ago, say 25, in the days of the "blue chip " companies, prices were based significantly on dividends ands the yield was linked  to the outside world through bond rates.  So you would expect some sort of correlation directly or indirectly with GDP.  Nowadays indexes particularly in the US are more strongly influenced by speculation.  There is no correlation causation between the price of Tesla and US GDP, just like there is no connection with the latter and the price of bitcoin.  

Another_Saver

Linton said:

Another area where I do not understand your model is:
Many years ago, say 25, in the days of the "blue chip " companies, prices were based significantly on dividends ands the yield was linked  to the outside world through bond rates.  So you would expect some sort of correlation directly or indirectly with GDP.  Nowadays indexes particularly in the US are more strongly influenced by speculation.  There is no correlation causation between the price of Tesla and US GDP, just like there is no connection with the latter and the price of bitcoin.  

That's still one way of valuing co's but the risk free rate/bond yields are a negligible fraction of what they were in the mid 90s so hard to compare.

And Tesla is a single co. All you get from applying macroeconomics to single cos is disappointment... There's a fabulous self-deprecating joke in there but I want to keep the forum clean.

[Deleted User]

Not all shares are free floating. Thats a big deal in China where the government owns A LOT.  The ratio will change a bit over time. Not a big deal. 

Another_Saver

You know when someone mentions China... It's time to give up.

cloud_dog

I know....why not just agree to disagree 🤔

[Deleted User]

Another_Saver said:

You know when someone mentions China... It's time to give up.

I am not sure why China can’t be mentioned. You seem to have some concerns about the difference between total market cap and the index (which is weighted market cap of free floating shares).  

Its not a big deal in countries like UK and US. In the US non-free float shares make up less than 6% of S&P500 companies. For example Goldman Sachs has a lot of partners. Its their business model. They own a decent chunk of the company (I am guessing 1/3). There is nothing sinister about it.  Its not “leakage”.  

In comparison, in China a huge chunk of the index is non-tradeable.  Its a meaningful concern for investors.  

Another_Saver

Ok one last point.
This Reuters article says the S&P 500 mkt cap at launch on 4/3/57 was $172bn (https://www.reuters.com/article/us-usa-stocks-sp-timeline-idUSBRE9450WL20130506).
I can only find monthly index data in multpl.com so I'll just treat them as the same data. Annualised Over 63 years the error should be negligible. Other S&P data from the monthly S&P factsheet.

1/3/57 S&P 500 index 44.03
30/11/20 S&P 500 index 3,621.63, mkt cap 31,605.45bn
Mkt cap grew 8.53%, index by 7.16%
Index lagged mkt cap by -1.25% pa

[Deleted User]

You are looking at the time before the current S&P 500 methodology for calculating free float cap was applied (probably 15 years ago). 

At the end of 2011 S&P 500 market cap was 11,982,408. S&P 500 was 1257.
At the end of 2019 market cap was 28,125,589. The index was 3230.  

Thats the “loss” of less than 0.86% cumulative over 8 years. Probably intraday trading.   I am not going to lose any sleep over it. 

Another_Saver

Deleted_User said:

You are looking at the time before the current S&P 500 methodology for calculating free float cap was applied (probably 15 years ago). 

At the end of 2011 S&P 500 market cap was 11,982,408. S&P 500 was 1257.
At the end of 2019 market cap was 28,125,589. The index was 3230.  

Thats the “loss” of less than 0.86% cumulative over 8 years. Probably intraday trading.   I am not going to lose any sleep over it. 

That's when the S&P 500 launched.
And my point is you disagreed earlier that this even happened.
Also where did you get that mkt cap data from?

[Deleted User]

It doesn’t. Based on the definition of S&P 500. Today. You keep going into prehistory. Things were different.  This is just one of the changes that I know about.  There was more. 

https://www.marketwatch.com/story/sp-move-to-float-adjusted-indexes-will-create-turnover

I got Index data from Macrotrends.net and market cap from siblisresearch.com/data/total-market-cap-sp-500