Point taken but I think it's a bit of a fallacy to frame this way. The market can go up and down as can individual stocks; "85% of the decline" doesn't make sense because some stocks are going up.
A book I read a few years ago put this more eloquently. Some governor said that 20,000 jobs were created last month and his state contributed half of them. Well, many states lost jobs and the state next door actually gained MORE jobs, so the "more than half" framing makes no sense
A similar explanatory mirage happens in elections: when a candidate loses by (say) 1% of the vote, people go looking for factors that produced a 1% swing and declare, “it’s because of inflation! it’s because they took position X! it’s because the other team focused harder on turnout!”. You can find several such explanations and no single one is the causal one.
I think the point was that those stocks are causing the S&P to be overweight towards those firms that are highly invested in AI. It's like comparing personal wealth when Warren Buffet and Bill Gates are included in the list - the average ends up far above the median.
I wouldn't say it's a fallacy. It's just an interesting way to look at the data.
I think more people need to be talking about the fact that the S&P 500 has extreme concentration risks that didn't exist 15+ years ago (and the Chart of the Day demonstrates that). We're in uncharted territories re: market cap concentration.
It becomes less interesting the more the “overweight” stocks correct.
The extreme concentration risk lessens as these 8 stocks fall in value compared to the rest.
I also don’t personally see the risk in the concentration. Risk of what? These companies are legitimately larger and doing more business than other firms.
Pick a median consumer. Which company are they sending more profit to than companies like Apple or Amazon?
10 years ago the average consumer maybe bought an iPhone from Apple every 3 years, so they gave Apple less than $100 of pure profit dollars per year.
Now that same consumer is giving Apple money for the iPhone, but also spending on services that they weren’t buying 10 years ago. If they’ve got an Apple One subscription they’re now sending Apple double or triple the profit they used to get.
These companies are big because they sell more things and are more diversified than they were in the past.
There’s no concentration risk. I’d actually argue that the concentration risk can be resolved overnight through antitrust regulation (e.g., force Apple and Amazon to split into multiple companies, as they already have obvious verticals that could stand alone).
We might have to come up with a new name for the top stocks if SpaceX and Anthropic IPO this year. I noted that Musk might be getting ahead of any IPO fatigue that might be caused by the big 2 AI companies. Will OpenAI somehow stealth their way into a listing before those two?
Also some of the recent declines will be due to the war.
It's been interesting to review my portfolio, such as it is, against this situation, and see that I'm down relatively little. Not because I've bet against anything per se, but I made a conscious decision years ago to diversify out of the SP500 ("VTSAX and chill!") into broader and exUS indices.
The broader US market is only about 25% bigger than the S&P500, FWIW. (Or put another way, S&P500 is about 80% of all US equity.) They also trade in almost lockstep:
Misleading because it shows % of total decline as opposed to each ones decline. The bigger the company the more points they have to lose..., so Oracle for example losing 20 points may be a smaller % decline on their part than a samller company that looses less.
It's totally crazy that Tesla gets included with real companies. It's a meme stock with a 323.88 price to earnings ratio. It has no business being in the S&P 500 and should quite frankly be delisted.
Markets can stay irrational longer than you can stay solvent. There are still plenty of people who still take everything Elon says as the truth in 2026. I know people who are otherwise very reasonable, immediately get defensive when presented with the mildest of the criticisms of Elon.
Yeah, I don't understand Elon's plot armor, especially after the calling a cave diver a pedo. That's when I definitively stopped liking him, though I always thought that the Hyperloop seemed pretty dumb.
I am not the first person to say this, but I guess I took a lot of what he said at face value because I don't really know anything about physics or rockets beyond a high school level. Then he started saying stuff about computers that were "slightly off" at best, and since I know a lot more about computers it made me realize he was kind of full of shit.
Sinclair's quote rings especially true here. Threatens a person's money, no matter how irrational, and you'll get the most disciplined thinkers devolve into 4chan level tirades.
Nasdaq announced today that their Fast Inclusion policy as official starting May 1st.
15 days of price discovery for SpaceX instead of 1 year for inclusion into indexes. Will be one of the largest wealth transfers from common people to the wealthy since it'll exploit all passive investments to provide exit liquidity for elon and his investors.
Tesla also doesn't have the margins or growth rates of software companies. Top automakers in the world all have a p/e of around 5-10. Microsoft is 26. Tesla is 320.
> During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital. Eventually, Burry's analysis proved correct: He made a personal profit of $100 million and a profit for his remaining investors of more than $700 million.
Yeah, if Elon pulling off a Seig Heil and literally running away with a country's data wasn't good times to short, I don't know what will.
You basically need to predict his death at this point. Which is unlikely due to being rich and not extremely old. But not off the table if you look behind the scenes at his habits.
I do hold TSLQ (and it's been doing great). That being said, Musk has engaged openly in fraud on a regular basis and the SEC has done nothing. At this point I have zero faith in the markets to adhere to the law.
TSLQ has been doing barely okay. The problem with investment vehicles like TSLQ which are daily shorts, is that over a period of time, it will suffer the same drawbacks as holding a short position and therefore making the timing of the position very important.
If you're going to gamble on $TSLA, shorting is probably the worst way to do so. It has unlimited downside (well, at least as much your broker allows before margin calling)
If you want to gamble, buy put options and size according to how much money you're okay with losing (the premium is all you pay)
True short positions are out of reach for basically any normal investor except those with completely broken risk tolerances (selling unbacked call options), eg the degen gamblers of r/wallstreetbets.
The problem is it's very easy to make a long-term bet the stock will go up (buy the stock) but it is very hard to make a long-term bet the stock will go down (you have to pick a date by which it occurs).
You're correct, but your assertion needs a qualifier: it's hard for small investors to make a long-term bet that a stock will go down.
Large investors do not need to purchase index funds, instead they can direct index and purchase the underlying stocks directly. If you're a small investor, the index funds offer diversification but without the ability to divest from individual stocks covered by the index; large investors that are direct indexing can just decide to exclude meme stocks and not buy them, and in so doing make a long-term bet that those stocks will underperform the rest of the index (and without needing to pick a specific date by which that underperformance will happen, unlike a short).
There's an argument to be made that there should be a maximum share price (stocks that reach the maximum trigger an automatic stock split), and that stocks should be allowed to trade for fractions of a penny (after all, what really prevents this in a day and age where all trades are electronically settled? Nobody needs to cash out for literal copper pennies...). Much smaller individual share prices would make it more feasible for smaller investors to build direct indexing strategies.
Silly. You should be selling off th ese trash stocks. Don't know why people keep recommending market cap weighted funds when they're being manipulated by scam artists like Elon and Trump into making the world's retirement funds into bag holders.
>It has no business being in the S&P 500 and should quite frankly be delisted
S&P500 inclusion is a simple math calculation based on market cap. By definition, Tesla must be included until its value drops far enough to exclude it. That will probably never happen short of an apocalyptic event.
Stocks that were driving the market in gains for two years are now going down? Who would have thought that these stocks might have been overbought by people...
S&P in general has been giving returns in the past ten years ~12%. Seems like more of the same to me.
I like how they keep making BS names to create their financial engineering BS marketing and narrative going. so it's The Hateful Eight now what for this year and next? It used to be, FAANG, MAG7,ZIRP this, ZIRP that, Gamestop reaching to their FT stories and every news reporting at same week and so many made up BS from finance engineers.
Media is ready to lie to you and feed you BS, just waiting order(s) from finance dep.
Point taken but I think it's a bit of a fallacy to frame this way. The market can go up and down as can individual stocks; "85% of the decline" doesn't make sense because some stocks are going up.
A book I read a few years ago put this more eloquently. Some governor said that 20,000 jobs were created last month and his state contributed half of them. Well, many states lost jobs and the state next door actually gained MORE jobs, so the "more than half" framing makes no sense
A similar explanatory mirage happens in elections: when a candidate loses by (say) 1% of the vote, people go looking for factors that produced a 1% swing and declare, “it’s because of inflation! it’s because they took position X! it’s because the other team focused harder on turnout!”. You can find several such explanations and no single one is the causal one.
I think the point was that those stocks are causing the S&P to be overweight towards those firms that are highly invested in AI. It's like comparing personal wealth when Warren Buffet and Bill Gates are included in the list - the average ends up far above the median.
I wouldn't say it's a fallacy. It's just an interesting way to look at the data.
I think more people need to be talking about the fact that the S&P 500 has extreme concentration risks that didn't exist 15+ years ago (and the Chart of the Day demonstrates that). We're in uncharted territories re: market cap concentration.
It becomes less interesting the more the “overweight” stocks correct.
The extreme concentration risk lessens as these 8 stocks fall in value compared to the rest.
I also don’t personally see the risk in the concentration. Risk of what? These companies are legitimately larger and doing more business than other firms.
Pick a median consumer. Which company are they sending more profit to than companies like Apple or Amazon?
10 years ago the average consumer maybe bought an iPhone from Apple every 3 years, so they gave Apple less than $100 of pure profit dollars per year.
Now that same consumer is giving Apple money for the iPhone, but also spending on services that they weren’t buying 10 years ago. If they’ve got an Apple One subscription they’re now sending Apple double or triple the profit they used to get.
These companies are big because they sell more things and are more diversified than they were in the past.
There’s no concentration risk. I’d actually argue that the concentration risk can be resolved overnight through antitrust regulation (e.g., force Apple and Amazon to split into multiple companies, as they already have obvious verticals that could stand alone).
> The market can go up and down as can individual stocks
Literally the main reason we even have indexes.
> "85% of the decline" doesn't make sense
85% of the decline represented by the overall index.
> so the "more than half" framing makes no sense
It makes perfect sense. It's just misleading.
FYI: Larry Ellison's net worth is down $200 billion since September. (Hateful Eight = Mag 7 + Oracle).
https://www.thebignewsletter.com/p/monopoly-round-up-the-ira...
Wonder how he'll survive on a mere $188 billion now.
give him a month or two and we’ll see how it’s going for him
We might have to come up with a new name for the top stocks if SpaceX and Anthropic IPO this year. I noted that Musk might be getting ahead of any IPO fatigue that might be caused by the big 2 AI companies. Will OpenAI somehow stealth their way into a listing before those two?
Also some of the recent declines will be due to the war.
Do people really care that much about short term decline? The SP500 was around 5000 a year ago, and it's currently well over 6000.
Yes. Nobody looks at the long term anymore.
Weird, I look at my investments in timescales measured in years.
If society could think past next quarter, we arguably wouldn't be in this mess to begin with.
It's been interesting to review my portfolio, such as it is, against this situation, and see that I'm down relatively little. Not because I've bet against anything per se, but I made a conscious decision years ago to diversify out of the SP500 ("VTSAX and chill!") into broader and exUS indices.
The broader US market is only about 25% bigger than the S&P500, FWIW. (Or put another way, S&P500 is about 80% of all US equity.) They also trade in almost lockstep:
https://totalrealreturns.com/n/VFIAX,VEXAX?start=2025-01-01
Aren't most exUS stocks dominated by the US economy?
Getting mostly out of hateful 8 hype isn't bad though when they're going down...
https://investor.vanguard.com/investment-products/etfs/profi...
Misleading because it shows % of total decline as opposed to each ones decline. The bigger the company the more points they have to lose..., so Oracle for example losing 20 points may be a smaller % decline on their part than a samller company that looses less.
Where did that money go to ?
It's totally crazy that Tesla gets included with real companies. It's a meme stock with a 323.88 price to earnings ratio. It has no business being in the S&P 500 and should quite frankly be delisted.
Markets can stay irrational longer than you can stay solvent. There are still plenty of people who still take everything Elon says as the truth in 2026. I know people who are otherwise very reasonable, immediately get defensive when presented with the mildest of the criticisms of Elon.
Yeah, I don't understand Elon's plot armor, especially after the calling a cave diver a pedo. That's when I definitively stopped liking him, though I always thought that the Hyperloop seemed pretty dumb.
I am not the first person to say this, but I guess I took a lot of what he said at face value because I don't really know anything about physics or rockets beyond a high school level. Then he started saying stuff about computers that were "slightly off" at best, and since I know a lot more about computers it made me realize he was kind of full of shit.
Sinclair's quote rings especially true here. Threatens a person's money, no matter how irrational, and you'll get the most disciplined thinkers devolve into 4chan level tirades.
Elon is working on a scam to get SpaceX into the S&P after its IPO in violation of current rules:
https://www.ft.com/content/59adbe42-ca30-47f3-9cda-5415945e9...
Nasdaq announced today that their Fast Inclusion policy as official starting May 1st.
15 days of price discovery for SpaceX instead of 1 year for inclusion into indexes. Will be one of the largest wealth transfers from common people to the wealthy since it'll exploit all passive investments to provide exit liquidity for elon and his investors.
space datacenters will need tesla powerwalls. also, flying saucers are using tesla superchargers onow
It is a crazy meme stock, but in terms of the S&P500, it's 2000x the size of the smallest S&P500 component.
Is that market cap or earnings? The market cap is the meme part. If TSLA had the P/E ratio of MSFT, shares would be worth $24.
Market cap. If it had the P/E of MSFT, it would still be 140x bigger than the smallest S&P500 component.
Tesla also doesn't have the margins or growth rates of software companies. Top automakers in the world all have a p/e of around 5-10. Microsoft is 26. Tesla is 320.
I don't disagree with any of that.
I like to believe that this was the actual reason to acquire Twitter: it’s the meme engine that keeps Tesla/SpaceX valuation high.
just look how s&p 500 is defined. your answer is right there. there is no “does cramsession approve” proviso in there.
You forgot spacex, which will be also added, fast track :)
Short it if you think it’s overvalued
Shorting requires both being right and good timing on when everyone else figures out you're right.
Famously: https://en.wikipedia.org/wiki/Michael_Burry
> During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital. Eventually, Burry's analysis proved correct: He made a personal profit of $100 million and a profit for his remaining investors of more than $700 million.
Yeah, if Elon pulling off a Seig Heil and literally running away with a country's data wasn't good times to short, I don't know what will.
You basically need to predict his death at this point. Which is unlikely due to being rich and not extremely old. But not off the table if you look behind the scenes at his habits.
Shorting requires a timeframe. When?
I do hold TSLQ (and it's been doing great). That being said, Musk has engaged openly in fraud on a regular basis and the SEC has done nothing. At this point I have zero faith in the markets to adhere to the law.
TSLQ has been doing barely okay. The problem with investment vehicles like TSLQ which are daily shorts, is that over a period of time, it will suffer the same drawbacks as holding a short position and therefore making the timing of the position very important.
Correct, but it's up 5% this month while most things are down. It's not a good idea to hold it long term for the reasons you say.
Is it only Musk? Pretty sure the President himself is manipulating the market
If you're going to gamble on $TSLA, shorting is probably the worst way to do so. It has unlimited downside (well, at least as much your broker allows before margin calling)
If you want to gamble, buy put options and size according to how much money you're okay with losing (the premium is all you pay)
True short positions are out of reach for basically any normal investor except those with completely broken risk tolerances (selling unbacked call options), eg the degen gamblers of r/wallstreetbets.
... and the standard reply to this standard reply is "The market can remain irrational longer than you can remain solvent."
The problem is it's very easy to make a long-term bet the stock will go up (buy the stock) but it is very hard to make a long-term bet the stock will go down (you have to pick a date by which it occurs).
You're correct, but your assertion needs a qualifier: it's hard for small investors to make a long-term bet that a stock will go down.
Large investors do not need to purchase index funds, instead they can direct index and purchase the underlying stocks directly. If you're a small investor, the index funds offer diversification but without the ability to divest from individual stocks covered by the index; large investors that are direct indexing can just decide to exclude meme stocks and not buy them, and in so doing make a long-term bet that those stocks will underperform the rest of the index (and without needing to pick a specific date by which that underperformance will happen, unlike a short).
There's an argument to be made that there should be a maximum share price (stocks that reach the maximum trigger an automatic stock split), and that stocks should be allowed to trade for fractions of a penny (after all, what really prevents this in a day and age where all trades are electronically settled? Nobody needs to cash out for literal copper pennies...). Much smaller individual share prices would make it more feasible for smaller investors to build direct indexing strategies.
It's actually easy. Just sell and invest somewhere else.
Silly. You should be selling off th ese trash stocks. Don't know why people keep recommending market cap weighted funds when they're being manipulated by scam artists like Elon and Trump into making the world's retirement funds into bag holders.
>It has no business being in the S&P 500 and should quite frankly be delisted
S&P500 inclusion is a simple math calculation based on market cap. By definition, Tesla must be included until its value drops far enough to exclude it. That will probably never happen short of an apocalyptic event.
Just QQQ and chill. You get all of the hardware companies monster gains to offset the losses.
Stocks that were driving the market in gains for two years are now going down? Who would have thought that these stocks might have been overbought by people...
S&P in general has been giving returns in the past ten years ~12%. Seems like more of the same to me.
I like how they keep making BS names to create their financial engineering BS marketing and narrative going. so it's The Hateful Eight now what for this year and next? It used to be, FAANG, MAG7,ZIRP this, ZIRP that, Gamestop reaching to their FT stories and every news reporting at same week and so many made up BS from finance engineers.
Media is ready to lie to you and feed you BS, just waiting order(s) from finance dep.
Unlike Mag 7, Hateful 8 doesn't really strike me as a term of endearment...
Unless you re a shortseller
If it includes Oracle, it tracks