4 ms·

> You know what made Bezos so rich in spite of a company that doesn't make much accounting sense? When everyone is betting on his success by blindly investing i

> You know what made Bezos so rich in spite of a company that doesn't make much accounting sense? When everyone is betting on his success by blindly investing in index funds. Let's see... AMZN: up 62.93% YTD S&P500: up 6.81% YTD I don't think index fund investors are the cause of Amazon's growth.

hndamien 8y ago
My theory it is QE and maybe Roboinvesting.
- the_gastropod 8y ago
  We've been (slowly) raising interest rates for the past few years. And even if it were QE, why would it (and robo investing) affect Amazon 10x more than the broader market?
  - hndamien 8y ago
    Well, not all of it. I also think Amazon is a good stock for many reasons. 10x seems like a stretch though, many other tech stocks have seen similar yields.
aphextron 8y ago
>I don't think index fund investors are the cause of Amazon's growth. Sure they are. Index funds are not equally weighted. Practically every tech ETF you can buy has Amazon weighted in the top 10, sometimes over 10% of total assets [0] whereas the average for other securities is below 1% at the most. [0] https://money.usnews.com/funds/etfs/large-growth/invesco-qqq-trust/qqq https://money.usnews.com/funds/etfs/large-growth/invesco-qqq...
- votepaunchy 8y ago
  The OP cites "S&P 500 or some total market fund", which are market-cap weighted.
  - aphextron 8y ago
    Irrelevant. The market cap is still affected by large scale automated passive investing.
- jonknee 8y ago
  What do you consider equal weighting? Amazon is the second most highly valued public company in the world, should it be counted the same in the index as Fossil Group (one of the smallest S&P 500 companies with a market cap of $1.15b)? To me that would make no sense and would make you hugely underweight AMZN and hugely overweight FOSL.
hindsightbias 8y ago
[edit - sorry, read that as amzn not causing index growth] FAANG+M probably has a disproportionate impact on the index https://www.cnbc.com/2017/07/28/fang-tech-market-concern-volatility.html https://www.cnbc.com/2017/07/28/fang-tech-market-concern-vol... >But the Street's favorite stocks have outsized clout in the index. For instance, Silverblatt says the FANG names — Facebook, Amazon, Netflix and Google parent Alphabet — equal about 7 percent of the S&P 500. With Apple, they make up about 10.6 percent.
- jonknee 8y ago
  That's simply because they are some of the biggest companies in the world. It's really the other way around, big tech is dragging the indexes up, not the indexes dragging up big tech.

hndamien 8y ago

My theory it is QE and maybe Roboinvesting.

the_gastropod 8y ago
We've been (slowly) raising interest rates for the past few years. And even if it were QE, why would it (and robo investing) affect Amazon 10x more than the broader market?
- hndamien 8y ago
  Well, not all of it. I also think Amazon is a good stock for many reasons. 10x seems like a stretch though, many other tech stocks have seen similar yields.

aphextron 8y ago

>I don't think index fund investors are the cause of Amazon's growth. Sure they are. Index funds are not equally weighted. Practically every tech ETF you can buy has Amazon weighted in the top 10, sometimes over 10% of total assets [0] whereas the average for other securities is below 1% at the most. [0] https://money.usnews.com/funds/etfs/large-growth/invesco-qqq-trust/qqq https://money.usnews.com/funds/etfs/large-growth/invesco-qqq...

votepaunchy 8y ago
The OP cites "S&P 500 or some total market fund", which are market-cap weighted.
- aphextron 8y ago
  Irrelevant. The market cap is still affected by large scale automated passive investing.
jonknee 8y ago
What do you consider equal weighting? Amazon is the second most highly valued public company in the world, should it be counted the same in the index as Fossil Group (one of the smallest S&P 500 companies with a market cap of $1.15b)? To me that would make no sense and would make you hugely underweight AMZN and hugely overweight FOSL.

hindsightbias 8y ago

[edit - sorry, read that as amzn not causing index growth] FAANG+M probably has a disproportionate impact on the index https://www.cnbc.com/2017/07/28/fang-tech-market-concern-volatility.html https://www.cnbc.com/2017/07/28/fang-tech-market-concern-vol... >But the Street's favorite stocks have outsized clout in the index. For instance, Silverblatt says the FANG names — Facebook, Amazon, Netflix and Google parent Alphabet — equal about 7 percent of the S&P 500. With Apple, they make up about 10.6 percent.

jonknee 8y ago
That's simply because they are some of the biggest companies in the world. It's really the other way around, big tech is dragging the indexes up, not the indexes dragging up big tech.