Joel Tillinghast: avoid investing in the single largest stock in the S&P 500

Familiarity can work against investors.  If you continuously invested in the single largest S&P 500 stock by market value between 1972 and 2016, your compound returns would have been less than 4 percent, while the index earned over 10 percent.  A smiliar but smaller effect was seen with the ten largest S&P 500 stocks.

~ Joel Tillinghast, Big Money Thinks Small, p. 60

Kevin Duffy on Tesla being added to the S&P 500

Tesla, which gained club membership on December 21, may turn out to be the canary in the coal mine.  It entered the index with a #6 ranking and about a 1.6% weighting, which means the remaining 499 or so holdings had to be trimmed by essentially 1.6% to make room. 

As it turns out, Tesla has rallied 30% since being anointed a “blue chip,” bringing its valuation to an eye-popping 193 times gross profit.  Without the benefit of auto credits (i.e. government subsidies), Tesla unlikely would have cleared the profit hurdle.

~ Kevin Duffy, The Coffee Can Portfolio, January 24, 2021