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Definitely agree the algorithm is likely pretty well documented but as noted in the blog it is adapted in realtime. Here's the current breakdown: Apple 7.08%,

Definitely agree the algorithm is likely pretty well documented but as noted in the blog it is adapted in realtime. Here's the current breakdown: Apple 7.08%, Microsoft 6.20%, Amazon.com 2.62%, NVIDIA 1.87%, Alphabet 1.84% Berkshire 1.65% Alphabet 1.61% Tesla 1.44% which if it was an active manager would be highly opinionated.

singhrac 4y ago
Really? That's essentially just the market cap weights, which is the most default thing you could do. There's a slight deviation because it's float-adjusted and I'm assuming their marks are at some frequency, but those numbers aren't mysteries.
- pavlov 4y ago
  I think the point is that the divergence in market cap is so large that it’s become equivalent to a highly opinionated active manager. Any fund that’s allocating over 13% to just two companies seems a bit risky, but that’s what you’re getting with Apple and Microsoft here.
  - sokoloff 4y ago
    I don’t think it’s as opinionated nor active as you’re making it out to be. Investing proportionally more in a huge company than you do in the 500th largest eligible company seems much more passive than active to me. If two S&P companies were to merge and everything else remained the same, I’d think that having the combined amount invested in the combined company to be more sensible than cutting your investment proportion in half merely by a merger. Or if a company you’d invested in doubled in value, I’d rather hold the constant number of shares rather than sell half of them to bring my exposure to the winner down. I’d also view that as passive and un-opinionated. Selling half feels more active and opinionated than simply holding.
  - deleted 4y ago
    [deleted]
  - singhrac 4y ago
    I’m sorry, but this is just not true. Active managers are measured by their deviation from the S&P (i.e. a beta 1 manager is extremely passive). This index has also always been concentrated to some extent, so not sure it’s any kind of recent change. I think maybe you are talking about risk, but it’s a completely separate idea.
DesiLurker 4y ago
unrelated basic question: Berkshire itself is a conglomerate that owns oprtions of S&P companies like Apple etc. So is this not double dipping?
skybrian 4y ago
I was confused by NVIDIA having a similar weighting to Alphabet despite having less than half the market cap. But notice that Alphabet appears twice. (GOOG and GOOGL.)

singhrac 4y ago

Really? That's essentially just the market cap weights, which is the most default thing you could do. There's a slight deviation because it's float-adjusted and I'm assuming their marks are at some frequency, but those numbers aren't mysteries.

pavlov 4y ago
I think the point is that the divergence in market cap is so large that it’s become equivalent to a highly opinionated active manager. Any fund that’s allocating over 13% to just two companies seems a bit risky, but that’s what you’re getting with Apple and Microsoft here.
- sokoloff 4y ago
  I don’t think it’s as opinionated nor active as you’re making it out to be. Investing proportionally more in a huge company than you do in the 500th largest eligible company seems much more passive than active to me. If two S&P companies were to merge and everything else remained the same, I’d think that having the combined amount invested in the combined company to be more sensible than cutting your investment proportion in half merely by a merger. Or if a company you’d invested in doubled in value, I’d rather hold the constant number of shares rather than sell half of them to bring my exposure to the winner down. I’d also view that as passive and un-opinionated. Selling half feels more active and opinionated than simply holding.
- deleted 4y ago
  [deleted]
- singhrac 4y ago
  I’m sorry, but this is just not true. Active managers are measured by their deviation from the S&P (i.e. a beta 1 manager is extremely passive). This index has also always been concentrated to some extent, so not sure it’s any kind of recent change. I think maybe you are talking about risk, but it’s a completely separate idea.

DesiLurker 4y ago

unrelated basic question: Berkshire itself is a conglomerate that owns oprtions of S&P companies like Apple etc. So is this not double dipping?

skybrian 4y ago

I was confused by NVIDIA having a similar weighting to Alphabet despite having less than half the market cap. But notice that Alphabet appears twice. (GOOG and GOOGL.)