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Google to be Added to S&P 500 Index 148

Posted by CowboyNeal from the finally-arrived dept.
hrbrmstr writes "According to marketwatch.com, Google is being added to the S&P 500, replacing Burlington Resources Inc. While this has provided a short-term boost to the stock price, time will tell what the overall impact will be on this respected index and the institutions (i.e. mutual funds) that follow it."
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Google to be Added to S&P 500 Index More

Google to be Added to S&P 500 Index

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  • Good News (Score:3, Insightful)

    by gurutc ( 613652 ) on Friday March 24, 2006 @08:30AM (#14987032)
    for Google's corporate image. I wonder when Google makes the Dow Jones? Seems like how Google's stock goes is a big indicator of how the market goes.
    • "for Google's corporate image. I wonder when Google makes the Dow Jones? Seems like how Google's stock goes is a big indicator of how the market goes."

      No individual stock (or group for that matter) is a good indicator of how the market will perform. The best that can be said is the market generally outperforms bonds in the long run (as it should, based on the market's higher risk).

    • Re:Good News (Score:1, Insightful)

      by HunterAmor ( 903799 )
      since it's not listed on the NYSE? never

      • Re:Good News (Score:4, Informative)

        by nelsonal ( 549144 ) on Friday March 24, 2006 @08:56AM (#14987108) Journal
        MSFT and INTC are both in the Dow Jones Industrial Average even though they are not listed on the NYSE. The Dow isn't exactly your folks' Dow anymore. Ironically, they are both getting closer to being the dogs of the Dow, anyone want to give odds on when that happens?
        • It will be a long time before google is on the Dow. If ever. They just don't move that quickly. Your examples are MSFT and INTC are two of the worlds largest companies and with solid profit and growth track records before they were added. There's a big jump between the S&P 500 and the Dow 40. And there is a long list of large companies that have been around a long time that aren't on the Dow. It also never overweights itself in any one sector, and between MSFT and INTC that's 1/20 of the index in

    • Re:Good News (Score:5, Insightful)

      by stecoop ( 759508 ) * on Friday March 24, 2006 @10:00AM (#14987357) Journal
      This might seem to be good news on the surface but let's look into the ramification of this. First would you buy any stock with a P/E > 50? I believe it is foolish and very risky to do so. Now the problem is that I own almost all of my investments in S/P 500. Hmmm - I will be indirectly buying this stock I don't want because it is a component of the 500; thus, to mirror the index my Mutual funds will have to start picking up Google. Crap, now I beleive the 500 is a slighlty higher risk investment now with Google then before without it and it dons't seem to follow my investment goals.

      • Re:Good News (Score:2, Interesting)

        by nelsonal ( 549144 )
        A couple of years ago, a stock whose business consisted of owning short term treasuries (silly but somewhat relavent) would have been priced at a 37% discount to their asset's market value at a 50 P/E. I think you'd agree that buying a treasury for 63 cents on the dollar represents a pretty good investment. Also, cyclical companies can see earnings swings of 300-400% from year to year, which can lead to cheap stocks with trailing P/E's that range all the way to infinity (no earnings last year--substantial
        • I think you'd agree that buying a treasury for 63 cents on the dollar represents a pretty good investment

          Actually I believe the peak oil theory. Combined with the inevitable long term consequences of the USA's national debt passing nine trillion dollars I think that any ten year investment denominated in US dollars is horrifyingly risky.
          US treasury bonds are still massively overvalued at 63cents per dollar.
          • Bills mature in 3 months or less, generally (they'd be pretty save up til the last tanker leaves Fujairah). Peak oil provides another example of a firm that could well be considerably undervalued at 50x earnings. A rational peak oil believing firm would extract and sell as little oil as possible, but should properly be valued on the oil in the ground which could be cheap relative to the oil in the ground even if priced well above 50x the prior years' income. Not always, but it is possible.

      • Re:Good News (Score:2, Interesting)

        by roach13 ( 940823 )
        While what you are saying is true on a basic level, the net impact on your funds is close to zero. The total risk/reward for any one stock, of the 500, when equally weighted, is insignificant. In fact, it may actually reduce risk by diversifying the S&P more. There are plenty of 'risky' stocks in the S&P 500, but it gains it's stability from having such a breadth of stocks that the maximum impact of one volatile stock is muted. If equally weighted, each company represents 0.2% of the portfolio.
      • If you're concerned that much about having Google in your S&P 500 mix, you can hedge against it by shorting Google (or using a proxy like long term put options) to the extent that they are represented in your S&P 500 holdings. If Google goes up, your S&P 500 holding goes up, but the hedge goes down, and vice versa in case Google tanks. For small accounts (under $25K) this might be clumsily achieved due to the impact of transaction costs, but for decent size accounts this is a readily available
      • Sorry but that's just plain wrong.

        When considering the risk of adding one stock to a particular portfolio (say, the S&P 500), the key determining factor is not the individual variation in the Google stock, but the covariance (http://mathworld.wolfram.com/Covariance.html [wolfram.com]) it has with all the other stocks in the portfolio already. When it comes to building a portfolio, we primarily care about the return of each stock + covariance among the stocks.

        It's really easy to check this just by looking at how the v

      • Would you buy a stock with a P/E over 50? If you're invested in the S&P 500, you already are. Would you buy a stock with negative EPS? Yep, you're all over that too.

        If you look at the constituent list for the S&P 500 [yahoo.com], I'm sure you'll see a lot companies that you'll like even less than Google, and you'll probably see a whole bunch more you have no clue about. Bailing just because you think one of the hundreds of constituents is overvalued is silly. If that's your investment style, then you sh

      • If you're that concerned about it, why don't you short Google as a hedge?
    • I wonder when Google makes the Dow Jones? Seems like how Google's stock goes is a big indicator of how the market goes.

      So the Dow Jones is up a couple hundred percent over the last couple years, but off 25 or 30% since Jan? I must have missed that story in the WSJ. You'd think they'd mention something like that.

      The Dow vs GOOG [yahoo.com] Doesn't look particularly similar to me.

    • "Indicator of the market"?

      Google went up 550% in 15 months and then down 28% in the next 3 months.
      During these times the S&P went up 18% and .5% and the DJIA went up 9% and 2%.

      I think Google is way to volatile to add to any market average.
      • Averages are less volatile not because they include low volatility stocks but because they're averages. A similar thing happens with molecules in the air -- their average energy determines the temperature, but there's still some really fast and really slow ones. But just because they exist doesn't mean you're going to burn or freeze to death randomly.

        In addition, the S&P 500 aims to track the 500 publically traded largest companies in the US. Currently Google is 40th in terms of market capitalization [investopedia.com]

  • Follow it all (Score:3, Funny)

    by JustOK ( 667959 ) on Friday March 24, 2006 @08:30AM (#14987033) Journal
    follow it all on http://finance.google.com/ [google.com]
    • good point. Just how unbiased are google (or Yahoo! for that matter) when reporting stories related to their own stocks?

      Is there any regulation?
      • good point. Just how unbiased are google (or Yahoo! for that matter) when reporting stories related to their own stocks? Is there any regulation?

        Considering that most(all?) news stories on finance sites are from news feeds like PR newswire and Associated Press the question to ask is what stories don't they report.

  • Google embodies the S&P (Score:5, Funny)

    by BadAnalogyGuy ( 945258 ) <BadAnalogyGuy@gmail.com> on Friday March 24, 2006 @08:30AM (#14987036)
    They are the Standard. And lately their search results have been quite Poor.

    I am interested in how they are going to expand with their main sources of income (U.S. and U.K.) pretty much saturated and their other international sources stagnant and losing to entrenched local search engines.

  • More info (Score:4, Informative)

    by DavidHOzAu ( 925585 ) on Friday March 24, 2006 @08:39AM (#14987062)
    From Bloomberg [bloomberg.com]

  • It's 1999 all over again (Score:5, Interesting)

    by hadj ( 926126 ) on Friday March 24, 2006 @08:39AM (#14987064) Homepage
    People have been saying this and I will say it again: these are signs of a new internet bubble. People (tend to?) forget. Lessons are learned the hard way.
    Although Google's image and bank deposit have become big, be aware their revenues are almost 100% dependent of advertisement revenues. This is a market which can turn upside down in a second.
    • indeed, their 10-K filing says in 2003 advertising sales made 97% of their revenue, and 99% in the years since..

      I don't disagree that the advertising market is volatile, and what has been wrought, can be undone--
      But I don't think in that market, a new evoloution (as theirs) can be done without some advance notice..
      i.e. I think the signs of impending DOOM would be far clearer than anything visible right now, there is nothing on the horizion
      and there is little chance for an upstart to topple google, in a ver

    • Re:It's 1999 all over again (Score:5, Interesting)

      by Bemmu ( 42122 ) <{if.atu} {ta} {esimol}> on Friday March 24, 2006 @09:03AM (#14987130) Homepage Journal
      And there are some interesting contenders out there. Google tends to forget that there are people living outside the US, UK and China. I'm sure they are getting there, but while they linger there are others moving into attack positions. The local ones mentioned before are eating away their user share, since they can take into account location & language specific things that Google may be ignoring while pursuing it's grand world domination plan. In some languages a simple word by word matching scheme may not be enough and conjugation needs to be considered as well. Google has also upset some folks with the China censorship thingy and wanting to move all the users' data on their centralized servers, in general displaying the sort of arrogant behavior that slowly makes people want to see them fail.

      Perhaps the most interesting engine to flock to would be http://www.majestic12.co.uk/ [majestic12.co.uk], a seti@home style distributed indexing system. Sure they're not to Google's index size yet, but they are getting there, faster and faster... and the fairness of their ranking algorithms are open to view and discuss -- perhaps with time such closed algorithms could be viewed with as much dislike as Microsoft's closed OS sources. I wonder if Stallman is using it.

      I am not a Google hater myself, personally I feel their search engine is adequate for my needs and their goal of organizing the world's information a very appealing one (although so broad that they might as well have said "we'll do what we please"). All I am saying is that it would not be unthinkable that the public opinion might slowly change, not favorably for them.

      • Re:It's 1999 all over again (Score:5, Interesting)

        by randomjohndoe ( 618905 ) on Friday March 24, 2006 @10:33AM (#14987534)
        >Perhaps the most interesting engine to flock to would be http://www.majestic12.co.uk/ [majestic12.co.uk], a seti@home style distributed indexing system.

        Now that is an interesting concept. Indexing the web would seem to be the kind of parallel operation ideally suited for distributed computing. You'd still need a central server to search the index and provide results quickly. (Okay, I decided to RTFL rather than just speculate, and I see that's what they're doing.) My initial assessment is that this is the most credible medium term threat to Google I've seen.

        >...the fairness of their ranking algorithms are open to view and discuss -- perhaps with time such closed algorithms could be viewed with as much dislike as Microsoft's closed OS sources

        Another excellent point. I wish I still had mod points. The closed nature of Google's ranking algorithms has disgruntled some folks, and an open system could become popular. Robert Cringely did a series on the mysterious workings of the AdWords algorithm, and whether Google is using the algorithms to "unfair" advantage. "Unfair" being quoted because even if they are doing it, it is not illegal, and perhaps not even unethical. But they could be deceiving or "gouging" (another loaded term) their advertisers, and it could be seen as counter to "Don't be evil". Cringely includes Google responses.

        The point is, the advantages of open algorithms are pretty obvious.

        http://www.pbs.org/cringely/pulpit/pulpit20050922. html [pbs.org]
        http://www.pbs.org/cringely/pulpit/pulpit20051006. html [pbs.org]
        http://www.pbs.org/cringely/pulpit/pulpit20051013. html [pbs.org]
        • The point is, the advantages of open algorithms are pretty obvious.

          Apologies for not taking the time to read the articles, will have to do that later, but do they address the main cost of opening the algorithms - they become easier to game and manipulate by unscrupulous sites and SEO consultants? Transparency is certainly beneficial, but I couldn't take such a call seriously unless it also addressed the drawbacks.
      • >>I wonder if Stallman is using it. No, he does not. I asked him once!
    • I wonder that since they have such a huge number of businesses signed to the various ad products, and that those businesses are of many different types, big and small, and the cost to those businesses is fairly cheap, are they really in danger of falling to a downturn? They are not like the banner ad pushers of the late 90s, whose clients were generally big business. And I wonder how many of those businesses popping up next to Google search results rely heavily on being listed prominently on Google. They si
    • Specifically, it's Bubble 2.0 (which is AJAX-enabled and speaks XML-RPC and SOAP)

    • Re:It's 1999 all over again (Score:5, Informative)

      by TheBogie ( 941620 ) on Friday March 24, 2006 @09:24AM (#14987203) Journal
      This is not exactly like 1999, in that Google actually makes money.

      Their gross profit last quarter was $372,208,000 http://finance.yahoo.com/q/is?s=GOOG [yahoo.com] .

      In 1999 almost all of the internet companies had yet to have their first profitable quarter.

      • Ebay, Yahoo, Cisco and other massivly overvalued stocks were all making pretty good money in 1999. The problem was investors were looking at their businesses and apparently expecting trees to grow to the sky or something.
      • In 1999, these top-tier companies weren't making money, but you couldn't tell from their balance sheets. Have people already forgotten the accounting tricks that were utilized?

        Many of these companies were showing positive EBITDA (operational profit before certain costs) at that time, because the market was just starting to demand it. Of course, it was all lies.

        Google's profit is probably not lies. And even though they are completely inept with accounting and money (see their pre-IPO share registration scand
      • Gross profit by itself is useless for deciding if a stock is over valued. At their current Market Cap, if they keep having quarters just like the one you're so happy with, their investors will have made their money back in... 70 years! That is, after all, what a 70 P/E ratio means. As things stand today, you'll be dead before you make money off Google. Of course investors in Google, if they've thought it through at all, presumably think it will grow enough to justify their investment. Like no company e
    • It's a different bubble, though. It's more of an advertising bubble not a tech bubble.

      Has anyone really measured the value of a Google add? Are they effective? Maybe it's already been done. Just from my own experience I rarely notice the adds. So if the advertisers would suddenly decide such adds aren't that valuable and stop advertising you'd see Google either change create more intrusive adds or they're going to have to find a completely different source of income.
      --
      Q
      • Are you asking how effective the ads are in terms of 'clicks per page impression'. That won't matter because advertisers only pay for the clicks. How well the clicks translate into sales can many times be measured directly by the advertiser (assuming the sales are online). So advertisers have a very good idea of how much these ads are worth to them, which is part of the appeal of this kind of advertising.

        The real threat to google's advertising model is click fraud (and the fact that advertising revenues
        • That won't matter because advertisers only pay for the clicks.

          I wasn't sure if they were paying for placement like in newspapers and magazines or paying on clicks.

          So then it does look more like a classic type bubble where demand for the stock has put the market cap way above company value. Any little blip is likely to scare the herd and cause a stampede away from it. Much like we saw a while back.

          In the end does the stock price really matter to Google?
          --
          Q
          • In the end does the stock price really matter to Google?

            In my opinion google is doing a very good job of looking long term. It's a concept that many companies don't grasp, and was especially absent in the bubble. Ironically this long term mentality has put them at odds with the type of people who buy their stock. I'm under the impression that the leaders at Google are more interested in putting together a legacy than keeping the stock price up. They've already cached in enough (as a company, not just a

    • Re:It's 1999 all over again (Score:2, Informative)

      by Anonymous Coward
      It's particularly weird given that Burlington Resources is a reasonably successful oil and gas company, and oil and gas isn't exactly a market in economic downturn at the moment (or probably in the next decade or two).

      Ah, wait, now I understand. Burlington Resources isn't really delisted, it was subsumed into Conoco-Phillips when they were bought out for $35.6 billion USD.

      Now it makes more sense: Google is filling an empty slot in the S&P500, though the rationale for replacing a resource company with a

    • Re:It's 1999 all over again (Score:4, Insightful)

      by Luscious868 ( 679143 ) on Friday March 24, 2006 @09:40AM (#14987262)
      This is a market which can turn upside down in a second.

      I would take it a step further. I would say it's a market that can, and will, turn upside down at some point. Google keeps expanding and, IMHO, keeps taking their eye off the prize. I'm increasingly having to go deeper and deeper into the search results to find the information I'm looking for and that doesn't bode well. That's exactly why I started using Google in the first place, to find what I was looking for and find it quickly. If some other search engine comes along that does it better, I'll switch in a heartbeat and I know I'm not alone. If I was, Google wouldn't be nearly as popular as it is now because almost every Windows user would stick with the MSN search that IE defaults to. I would argue that people don't use Google because it's Google, people use Google because it works. They are a website, not an OS, and unlike Microsoft people can and will change if somebody comes along that does it better.

      • Your search woes are because unscrupulous website makers are working as hard as they can to skew their website rankings. When Google was now, they didn't have to worry about people working the system because Google wan't big enough to care about. Anybody who puts out a search engine based on all new criteria (that works, of course) will have a temporary grace period where their searches will be more pristine. Then the ad hogs and meta pages will move in and shit all over that search engines results, too.

        G
        • Google isn't getting worse because the engine is flawed, it just gets harder to keep up with the assholes.

          Yes, last time I was looking for websites about the proper care and feeding of goates and sheep, guess what turned up in the 30 first pages?

    • The difference is that today, Google is a household name internationally, that has billions in profits. Slightly different than investing in Dr. Koop.com.
      • I wonder if investors lost more on the stable and surviving Cisco, Suns and Intels of the market (Cisco's peak market cap was $575 billion) or the Pets.com, DrKoop.com and other bankrupts (DrKoop's peak market cap was 1.3 billion). There were lots more of the latter and they are worth nothing now, but is it better to have a huge pie decline 80% or a smaller pie decline 100%.
    • Because the index is weighted by total stock valuation, the bubble stocks are over represented compared to a equal weight index like the DJIA. In the late 1990s almost a third of S&P 500 was tech-related. Some people have estimated the S&P 500 is currently over 20% real-estated-related due to the housing price bubble.
    • Like SUNW was. And another company I forget. Something like 60% of the value of the DJIA was determined by tech stocks at that time. I never understood why they did that, I guess they wanted the DJIA to skyrocket like the NASDAQ was doing. But is the point of an index to skyrocket or to represent what the overall market (or economy) is doing?

      Everyone took their eye off the ball back then. And here we go again.
    • This is a market which can turn upside down in a second.

      Like the economy.

      I have more faith in Google to be profitable than I do the US economy. Actually....

  • Is this really a good thing? (Score:5, Insightful)

    by the_humeister ( 922869 ) on Friday March 24, 2006 @09:03AM (#14987126)
    The P/E and forward P/E of the S&P has been getting higher and higher every decade. This won't help. Sure they have to replace Burlington resources with something, but Google? Well, I guess they offset GM for the short term at least.

  • S&P? (Score:1, Informative)

    by Anonymous Coward
    For us the Europeans who only care about EEUU only when EEUU means a new Natalie Portman film, coca cola (fuck you pepsi) or the pr0n industry, what is S&P?
    • Standard & Poors = S&P

    • Re:S&P? (Score:4, Interesting)

      by silverbax ( 452214 ) on Friday March 24, 2006 @09:33AM (#14987230)
      Standard & Poors 500 - a group of stocks that are chosen to represent the movement of the overall market. It's a better indicator than the Dow Jones index, which is only about 30 stocks.

      As for Google joining the S&P, it doesn't mean anything other than a momentary blip on the stock price. It's an inflated stock which doesn't pay a dividend and is traded far over it's revenue. Personally, I wouldn't touch the stock, especially because not only is it overvalued, but the company could very easily be displaced by another company who comes along and does a better job. It's not like a group of college kids can get together and form a competitor to Exxon or Coca Cola, but they sure could threaten Google. It's just that the average, non-technical person wants to get on the next Big Thing Train and they've heard of Google, they probably use the search engine, so they buy the stock.

  • Comment removed (Score:5, Insightful)

    by account_deleted ( 4530225 ) on Friday March 24, 2006 @09:30AM (#14987218)
    Comment removed based on user account deletion
    • Corporate Search [bearingpoint.com] you say?

      They're positioning themselves.
    • You could say the same thing about television and radio.
      • You could say the same thing about television and radio.

        At look where they are now. Declining ratings, falling revenues. If Google is superceeded by a better search offering, then their revenues could quickly take a tumble.
      • You could say the same thing about television and radio.

        You can say the same thing about television. TV advertising revenue is declining since 2001. People no longer watch TV as much as they did (they now also idly surf the internet), and when they watch it, they watch smarter (on a TiVO, where they can easily skip the ads...).

        Situation has become so bad that in Germany the currently free television stations consider changing over to a subscription model, at least as far as their satellite broadcast is c

    • Right now Google is built on an advertising model. They are just one decline in online advertising away from having everything fall out from under them. If they are going to stay a serious contender, they need to take the corporate search market very, very seriously and make it a key component of their product offerings.

      For all that can be said about them, Microsoft at least sells products as the foundation of their business. As long as people need a good (yes, XP is good for many users, this coming from

    • Last I heard, over 20% of people's entertainment time is now spent on the internet, whereas only 5% of ad dollars are spent online. Most estimates expect the market to grow faster than it has been that I have heard.

      I think a decrease in Google's revenue would come from increased competitive pressure, and not a decrease in the advertising industry. MSN search is actually quite nice...I hope they don't get rid of it to replace it with that POS Windows Live Search. It makes for a nice backup when I can't find
  • Reading what the heads of Google had to say about their stock (careful, careful, careful, our market is so competitive, we could loose to Yahoo or Microsoft any second) I suppose they themselves would not have included it.
  • Why do I have mixed feelings about it?
    In one hand, our favourite just got a boost, recognition. In the other hand it just got a little bit more corporate, evil. A Jedi Knight who has just killed a powerful evil opponent who wasn't defending. A victory, yes, but corruption of the dark side grows. Will they be able to remain Good?

  • remember Google? (Score:5, Funny)

    by i_am_the_r00t ( 762212 ) on Friday March 24, 2006 @09:53AM (#14987318)
    the search engine with the tiny, sparse page?

    now when I do a search What I get Sounds like a Starbucks drink.

    Froogle-Local-Picasa-Blogger no whip, please.

    Don't be evil.

  • It's reasonable for S&P (Score:3, Interesting)

    by Vo0k ( 760020 ) on Friday March 24, 2006 @10:19AM (#14987456) Journal
    Like Google has mission of providing good search results, S&P is about providing reliable index value. Google is representative of the IT sector and there's not much about it being 'good', 'strong', 'reliable' or anything like this. Google will be the first to go down the drain if the bubble bursts and S&P know it well - and pretty much that's why they added Google. Because it will pretty well show when the bubble bursts, resulting in accurate indication of the state of the market by S&P. Google may not like Microsoft but when people type 'MS Windows' in Google, they expect to be sent to the proper Microsoft webpage, and that's why Google keeps Microsoft scored high for these keywords in their results. Brokers watching S&P expect to see it go down when the stock is about to down really deep, so a group of companies that will go down first are likely to be listed. Google rides the tide of the net, new technologies, new developments, the leading edge - so they pretty well predict which way the market is going, stagnant, losing, gaining - they are useful as the indicator. So rejoicing or grieving about them being added to S&P doesn't matter and won't help or disturb Google all that much. It will help S&P.

  • Let god forbid GOOG in DJIA. (Score:3, Informative)

    by cpatil ( 955342 ) on Friday March 24, 2006 @10:39AM (#14987570) Homepage
    Most of you here expect GOOG to enter DJIA. No not so soon. Any Dow component is a fully matured company, in other words their growth is limited to less than 9%. I really don't want GOOG to be one of those. Let it continue to grow at 40-50% a year :-)
  • ...and it will still outperform 80-90% of money fund managers, year-in, year-out. There is nothing to see here, at least for the S&P500.
  • Not sure what percentage of the S&P this will constitute but it will probably be too high for my tastes.

    Don't think there's much upside left on GOOG.
    • Hold off on that sale. If you really think it's going to go down, you're better off buying put options on SPDR futures, instead, to hedge your position. That way, no matter what happens, you come out ahead. If your broker lets you complete this sale without at least mentioning this option, fire him and go find someone who knows what their doing.

      Disclaimer: I have a Series 7, but I'm not currently working as a broker.

  • Sell low, buy high? (Score:5, Insightful)

    by jackjumper ( 307961 ) on Friday March 24, 2006 @11:12AM (#14987763)
    According to this guy [ricedelman.com], this is a big problem with the S&P 500 index funds. When a company gets added, it's riding high. The company that gets bumped is low. So if you follow the S&P, you're selling low and buying high.
    • If that's true, then why do 75-80%of mutual funds under perform [iht.com] the S&P index? Sure, maybe some mutual funds also buy high and sell low, but statistically no more than half of funds can do that in a market generally trending upwards. Therefore owning the 500 biggest publically traded US companies is a successful investment strategy, even if index funds must pay up a bit when a company is added to the index.
    • OK, let me summarize his argument. Now this is his argument, not necessarily mine - I don't know one way or the other, but it's an interesting argument. Here it is: 1. You can't compare the s&p 500 index with an s&p 500 fund. The index doesn't take a hit for doing this, because it's just a mathematical abstraction, not a real fund. A fund has taxes, fees, and actually has to sell and buy things. An index doesn't. 2. If you look at the 20th century as a whole, historically small stocks have

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