Index additions and deletions are typically a routine affair, but the recent announcement by S&P that Tesla would be added to the widely tracked S&P 500 Index stirred up quite a lot of attention. No surprise, given that Tesla is the largest company to ever join the index and, at the time of its addition on December 18, 2020, became the sixth-largest company in the S&P 500. On news of the announcement on November 16, Tesla’s stock price jumped 8.2%
Read more
Insights
Tesla’s Charge Reveals Weak Points of Indexing
A Regression to Long-Term Means?
“A Man’s inability to see the power of regression to the mean leaves him blind to the nature of the world around him.” Michael Lewis, The Undoing Project: A Friendship That Changed Our Minds. Reviewing historical annual long-term equity premiums and returns, we can conclude the following: US Small companies outperform US Large Companies by 2.02% International Small companies outperform International Large companies by 4.91% US Value companies outperform US Growth companies by 3.18% International Value companies outperform International
Read more
