S & P 500 Financials Weighting

The S & P 500 index is composed of several different market sectors. The major categories are as follows:

1) Energy
2) Materials
3) Industrials
4) Consumer Discretionary
5) Consumer Staples
6) Healthcare
7) Financials
8) Information Technology
9) Telecommunications
10) Utilities

Believe it or not however, not all sectors are created equally nor do they each possess a 10% weighting in the index. Over time as the values of the individual underlying 500 stocks changes so does the composition of the index, its value, and the weighting of each sector. The index is down to 732 currently from 1400 a couple years ago, but not all sectors are down 50% and some may be down more than 50%!!!

The interesting note here and one reason to be more interested in a stock market index approach versus individual equities is the following weightings of the financial sector as a portion of the index:

Financials as % of SP 500

March 2007 - 21.8%

March 2009 - 9.8%

I don't expect financials back at 22% of index any time in oh say the next 30 years. As a point of reference - Energy composed about 30% of the index back in 1980, then fell to about 8% of the index in 2001 and currently composes around 14% of the index.

Just remember - there are lies, damn lies, and statistics. Still, this is a different way to think about the market that most people don't attempt.