MMQH: Investing In What You Know
Monday Morning Quick Hits
Famed investor Peter Lynch once told us to invest in what we know. While he qualified that by saying it’s not quite that simple, there is some truth to it. I was reminded of this the other day during a client meeting, when a client asked me what the top components were of the S&P 500 index. My first response was, “a lot of the companies you use every day.” So I pulled the companies by market cap up on our screen and showed him what the largest holdings in the index were.
After the meeting that got me to thinking…I wonder how many of the 25 largest US companies I utilize on a daily or frequent basis? This was actually a fun exercise to do, and I’ve outlined my results below. If you have time, I encourage you to do the same thing. It’s a great way to learn about what different companies are involved in, and how many of them really do come into play in our lives on a daily or weekly basis. Here’s the list…
*This data is taken from https://www.slickcharts.cm/sp500, as of 3/07/2019. The market capitalization (or size of the companies) may have changed slightly since then.
So all in all, I use products and/or services from 12 of the 25 largest US companies on a daily basis, and 15 of the largest 25 on a weekly basis. I may even have missed one or two. What amazes me even more, and also makes a lot of sense given the size and scope of their companies, is that most days I use 4 of the top 7 before it’s even 8am (Apple, Microsoft, Amazon, Alphabet). In general, my usage is more concentrated near the top of this chart.
I guess the main takeaway here is one component of investing sometimes can be as simple as looking at what products and services we are always using. Whether we like it or not, these companies are intertwined in our lives to an extent where we almost cannot live without them.
I hope you enjoyed this and maybe learned about a few companies along the way. As always, please let us know if you have any questions or if there’s anything we can do for you.
Have a great day!
All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.
The Standard & Poor (S & P) 500 Index tracks the performance of 500 widely held, large-capitalization US stocks.