The Hateful Eight is 85% of S&P 500 Decline
Comments
jackconsidine
cj
I wouldn't say it's a fallacy. It's just an interesting way to look at the data.
I think more people need to be talking about the fact that the S&P 500 has extreme concentration risks that didn't exist 15+ years ago (and the Chart of the Day demonstrates that). We're in uncharted territories re: market cap concentration.
dangus
It becomes less interesting the more the “overweight” stocks correct.
The extreme concentration risk lessens as these 8 stocks fall in value compared to the rest.
I also don’t personally see the risk in the concentration. Risk of what? These companies are legitimately larger and doing more business than other firms.
Pick a median consumer. Which company are they sending more profit to than companies like Apple or Amazon?
10 years ago the average consumer maybe bought an iPhone from Apple every 3 years, so they gave Apple less than $100 of pure profit dollars per year.
Now that same consumer is giving Apple money for the iPhone, but also spending on services that they weren’t buying 10 years ago. If they’ve got an Apple One subscription they’re now sending Apple double or triple the profit they used to get.
These companies are big because they sell more things and are more diversified than they were in the past.
There’s no concentration risk. I’d actually argue that the concentration risk can be resolved overnight through antitrust regulation (e.g., force Apple and Amazon to split into multiple companies, as they already have obvious verticals that could stand alone).
keernan
The concentration risk relates to diversification in investing. Index funds are generally thought of as a way to diversify a portfolio. Cap weighted index funds are generally preferred because they are cheaper for the provider to maintain. Compare VOO with RSV for example. VOO is cap weighted. RSV is equal weighted - which means investors in RSV bear the cost of periodically readjusting all holdings so they are once again equally weighted - something no necessary with VOO.
I am not the only investor who has taken steps to offset the overly high concentration in the SP500 that raises the riskiness of an investment portfolio. I've done so by splitting my VOO holdings in half, split 50/50 VOO/VTV that strategically diminishes the impact of the high top 10 stocks in the SP500.
dangus
I certainly think it's a good thing to diversify investing, while recognizing that there is value in putting a lot of your bets into heavyweights that are very likely to do very well in the long term.
One of my main points here is that dumping a lot of money into one company isn't always something that represents lack of diversity in your investment dollars.
A company like Microsoft has its hands in so many business verticals that its stock by itself is a highly diverse asset.
I also think it's important to realize that massive companies like these have inherent advantages over smaller ones. A company like Framework literally cannot make a better laptop than Apple even if an angel investor dropped billions of dollars into their laps. Even if they pulled it off, it wouldn't come with a free trial for Apple's content subscriptions and other revenue-maximizing features, and the wholesale price they get from the factory can't match Apple's margins on the device until they convince a large enough mass of people to buy them.
That's the kind of stuff that big companies can do, and that's why they are worth more putting more bets into than smaller ones.
Obviously, companies like Tesla and Nvidia are far bigger risks in the S&P 500, but they represent a small minority of those giants.
keernan
There is nothing wrong with your desire to 'dump[ing] a lot of money into one company'. That is easy to do without an index fund. And it is not the investing theory behind the creation of index funds and their investing purpose. When 8 companies dominate an index fund, that means the index is not performing the intended function for which it was created.
cj
I wonder what a solution could look like. Perhaps keep the market cap weighting, but cap the weighting at a max $500b (or some sliding scale to prevent the top X stocks from composing more than Y% of the portfolio)
keernan
That would certainly be a way to control escalating concentration but at the expense of keeping index fund costs low. The Vanguard Total Stock Index (VTI) has an expense ratio of 0.03 - almost zero. Low expenses is a critical factor behind why index funds outperform active investing. So, yes, your proposal would work, but the expense ratio would up to implement the cap.
dangus
But the index fund is doing what it was designed for, which is to index on the companies based on their relative importance in the marketplace.
And that’s really my whole point. Someone who is buying an S&P Index fund wants to own more Apple than GoDaddy, because Apple represents much more economic activity than GoDaddy.
keernan
[delayed]
chiph
I think the point was that those stocks are causing the S&P to be overweight towards those firms that are highly invested in AI. It's like comparing personal wealth when Warren Buffet and Bill Gates are included in the list - the average ends up far above the median.
toomuchtodo
Yes.
Citations:
Apollo Academy: S&P 500 Concentration Approaching 50% - https://www.apolloacademy.com/sp-500-concentration-approachi... - March 14th, 2026
> The 10 biggest companies in the S&P 500 make up almost 40% of the index, and if Anthropic, OpenAI and SpaceX are added later this year, the concentration could approach 50%, see chart below. The bottom line is that the S&P 500 basically doesn’t offer much diversification anymore.
Apollo Academy: Extreme AI Concentration in the S&P 500 - https://www.apolloacademy.com/extreme-ai-concentration-in-th... - January 13th, 2026
> The bottom line is that investors in the S&P 500 remain overexposed to AI.
TLDR Concentration risk https://www.finra.org/investors/insights/concentration-risk
(not investing advice)
thinkling
A similar explanatory mirage happens in elections: when a candidate loses by (say) 1% of the vote, people go looking for factors that produced a 1% swing and declare, “it’s because of inflation! it’s because they took position X! it’s because the other team focused harder on turnout!”. You can find several such explanations and no single one is the causal one.
a_ba
I don’t think it’s misleading (at all) when you take into account that the index is volume weighted. If you held two different stocks: 1 from megacorp worth 90; 1 from smallcorp worth 10; if megacorp is down 10% while smallcorp is up 10%. Your portfolio would still be worth less even though 50% of your portfolio positions are up.
themafia
> The market can go up and down as can individual stocks
Literally the main reason we even have indexes.
> "85% of the decline" doesn't make sense
85% of the decline represented by the overall index.
> so the "more than half" framing makes no sense
It makes perfect sense. It's just misleading.
aworks
FYI: Larry Ellison's net worth is down $200 billion since September. (Hateful Eight = Mag 7 + Oracle).
https://www.thebignewsletter.com/p/monopoly-round-up-the-ira...
paxys
Wonder how he'll survive on a mere $188 billion now.
keeganpoppen
give him a month or two and we’ll see how it’s going for him
yunnpp
He's gonna have to flip burgers at McDonald's to make ends meet.
SirMaster
Do people really care that much about short term decline? The SP500 was around 5000 a year ago, and it's currently well over 6000.
tcmart14
It depends. People can always say, "zoom out," but that only works if you plan to be long term invested. Really it's more of a, what is your investment horizon/window. If you were planning to reap what you sowed in the stock market right now, you'd maybe be screwed. But like myself, the money I put in (personal account), Im not looking to touch for at least 10 years. Although right now/near term, it's not clear if we will be going up anytime soon. We were already stalling for the better part of the last 6-7 months on growth. Now we are going down with potential macro events that may keep it going down or stall growth for a bit. But as I said, if you're putting in money today planning not to touch it in 10-20 years, don't sweat it. Until the recent events in the Middle East, my international ETF was out performing the S&P500 by quite a bit.
Also consider there was a period it took the NASDAQ something like 15 years to recover from a crash after ATH. If your 20 and don't plan to touch it till your 60, whatever. But if you were 55 and looking to capitalize on it at 65, well, zoom out doesn't mean much to you.
SirMaster
I mean I am planning to still be adding to my investments and not selling any of it for more than 20 years. If you are caring about the short term returns then you wouldn't or shouldn't be invested so heavily in stocks, you should be shifting to more stable investments as you approach retirement or the time in which you plan to start selling some of your investments.
Not only does a pull back not really matter in the long term, but it even provides an opportunity to buy more at a lower cost now too!
johnnyanmac
If society could think past next quarter, we arguably wouldn't be in this mess to begin with.
Balgair
they just changed the reporting req to every 6 months too
Uvix
Yes. Nobody looks at the long term anymore.
SirMaster
Weird, I look at my investments in timescales measured in years.
Balgair
Rest and Vesters?
No.
Dodobrains on r/wallstreetbets?
The basement has never been so salty.
Honestly, it's all clickbait in the end. 'Real' investors are still quietly just plugging their weekly contribution into their 401k week after week without even remembering it.
zhengyi13
It's been interesting to review my portfolio, such as it is, against this situation, and see that I'm down relatively little. Not because I've bet against anything per se, but I made a conscious decision years ago to diversify out of the SP500 ("VTSAX and chill!") into broader and exUS indices.
loeg
The broader US market is only about 25% bigger than the S&P500, FWIW. (Or put another way, S&P500 is about 80% of all US equity.) They also trade in almost lockstep:
IAmBroom
"Almost".
This is specifically one of those points in stock history where it isn't true; the heavyweights of the S&P 500 are dragging it down while the smaller companies are less affected.
loeg
I brought a graph in my earlier comment! Even over the past year, they're highly correlated. (And the S&P500 is ahead over the period -- not the other 25%.)
readthenotes1
Aren't most exUS stocks dominated by the US economy?
Getting mostly out of hateful 8 hype isn't bad though when they're going down...
https://investor.vanguard.com/investment-products/etfs/profi...
kristianp
We might have to come up with a new name for the top stocks if SpaceX and Anthropic IPO this year. I noted that Musk might be getting ahead of any IPO fatigue that might be caused by the big 2 AI companies. Will OpenAI somehow stealth their way into a listing before those two?
Also some of the recent declines will be due to the war.
cramsession
It's totally crazy that Tesla gets included with real companies. It's a meme stock with a 323.88 price to earnings ratio. It has no business being in the S&P 500 and should quite frankly be delisted.
jordanb
Elon is working on a scam to get SpaceX into the S&P after its IPO in violation of current rules:
https://www.ft.com/content/59adbe42-ca30-47f3-9cda-5415945e9...
malfist
Nasdaq announced today that their Fast Inclusion policy as official starting May 1st.
15 days of price discovery for SpaceX instead of 1 year for inclusion into indexes. Will be one of the largest wealth transfers from common people to the wealthy since it'll exploit all passive investments to provide exit liquidity for elon and his investors.
darth_avocado
Markets can stay irrational longer than you can stay solvent. There are still plenty of people who still take everything Elon says as the truth in 2026. I know people who are otherwise very reasonable, immediately get defensive when presented with the mildest of the criticisms of Elon.
tombert
Yeah, I don't understand Elon's plot armor, especially after the calling a cave diver a pedo. That's when I definitively stopped liking him, though I always thought that the Hyperloop seemed pretty dumb.
I am not the first person to say this, but I guess I took a lot of what he said at face value because I don't really know anything about physics or rockets beyond a high school level. Then he started saying stuff about computers that were "slightly off" at best, and since I know a lot more about computers it made me realize he was kind of full of shit.
steve_adams_86
Worse yet, he doesn't seem to realize when he's full of shit. He's very confidently wrong. It makes me so curious to understand what his competencies actually are. Clearly he's not an idiot; he's got to be great at some things. I just can't tell what it would be anymore.
tombert
I actually think he might just be an idiot. I think a lot of people respond to people who are extremely confident, and whether or not they are "right" about anything is secondary.
I mean we have a president who has almost never even completed an entire sentence, but he tells you how smart he is all the time and people just believe it.
johnnyanmac
Sinclair's quote rings especially true here. Threatens a person's money, no matter how irrational, and you'll get the most disciplined thinkers devolve into 4chan level tirades.
instalabsai
I like to believe that this was the actual reason to acquire Twitter: it’s the meme engine that keeps Tesla/SpaceX valuation high.
loeg
It is a crazy meme stock, but in terms of the S&P500, it's 2000x the size of the smallest S&P500 component.
cramsession
Is that market cap or earnings? The market cap is the meme part. If TSLA had the P/E ratio of MSFT, shares would be worth $24.
loeg
Market cap. If it had the P/E of MSFT, it would still be 140x bigger than the smallest S&P500 component.
paxys
Tesla also doesn't have the margins or growth rates of software companies. Top automakers in the world all have a p/e of around 5-10. Microsoft is 26. Tesla is 320.
loeg
I don't disagree with any of that.
keeganpoppen
just look how s&p 500 is defined. your answer is right there. there is no “does cramsession approve” proviso in there.
Bombthecat
You forgot spacex, which will be also added, fast track :)
seydor
space datacenters will need tesla powerwalls. also, flying saucers are using tesla superchargers onow
ramesh31
>It has no business being in the S&P 500 and should quite frankly be delisted
S&P500 inclusion is a simple math calculation based on market cap. By definition, Tesla must be included until its value drops far enough to exclude it. That will probably never happen short of an apocalyptic event.
loeg
It's not quite that simple -- there are other criteria. E.g., MSTR is not included in the index. And technically the committee overseeing it has some discretion.
That said, I agree that TSLA easily meets the criteria for inclusion -- even if you assume a normal automaker P/E of ~5 instead of TSLA's meme-stock ~330.
amazingamazing
[flagged]
ceejayoz
Shorting requires both being right and good timing on when everyone else figures out you're right.
Famously: https://en.wikipedia.org/wiki/Michael_Burry
> During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital. Eventually, Burry's analysis proved correct: He made a personal profit of $100 million and a profit for his remaining investors of more than $700 million.
johnnyanmac
Yeah, if Elon pulling off a Seig Heil and literally running away with a country's data wasn't good times to short, I don't know what will.
You basically need to predict his death at this point. Which is unlikely due to being rich and not extremely old. But not off the table if you look behind the scenes at his habits.
cramsession
I do hold TSLQ (and it's been doing great). That being said, Musk has engaged openly in fraud on a regular basis and the SEC has done nothing. At this point I have zero faith in the markets to adhere to the law.
darth_avocado
TSLQ has been doing barely okay. The problem with investment vehicles like TSLQ which are daily shorts, is that over a period of time, it will suffer the same drawbacks as holding a short position and therefore making the timing of the position very important.
cramsession
Correct, but it's up 5% this month while most things are down. It's not a good idea to hold it long term for the reasons you say.
parthdesai
Is it only Musk? Pretty sure the President himself is manipulating the market
hypeatei
If you're going to gamble on $TSLA, shorting is probably the worst way to do so. It has unlimited downside (well, at least as much your broker allows before margin calling)
If you want to gamble, buy put options and size according to how much money you're okay with losing (the premium is all you pay)
rtkwe
True short positions are out of reach for basically any normal investor except those with completely broken risk tolerances (selling unbacked call options), eg the degen gamblers of r/wallstreetbets.
seydor
Shorting requires a timeframe. When?
zhengyi13
... and the standard reply to this standard reply is "The market can remain irrational longer than you can remain solvent."
bombcar
The problem is it's very easy to make a long-term bet the stock will go up (buy the stock) but it is very hard to make a long-term bet the stock will go down (you have to pick a date by which it occurs).
solatic
You're correct, but your assertion needs a qualifier: it's hard for small investors to make a long-term bet that a stock will go down.
Large investors do not need to purchase index funds, instead they can direct index and purchase the underlying stocks directly. If you're a small investor, the index funds offer diversification but without the ability to divest from individual stocks covered by the index; large investors that are direct indexing can just decide to exclude meme stocks and not buy them, and in so doing make a long-term bet that those stocks will underperform the rest of the index (and without needing to pick a specific date by which that underperformance will happen, unlike a short).
There's an argument to be made that there should be a maximum share price (stocks that reach the maximum trigger an automatic stock split), and that stocks should be allowed to trade for fractions of a penny (after all, what really prevents this in a day and age where all trades are electronically settled? Nobody needs to cash out for literal copper pennies...). Much smaller individual share prices would make it more feasible for smaller investors to build direct indexing strategies.
bombcar
True, though there are some ways of even relatively small investors doing direct indexing.
But when you start modifying the index you're not really indexing anymore ...
And this is not really a bet against the stock, just a value tilt away from it betting that there are better performance elsewhere. You don't make money because TSLA tanked, you make money (or don't lose money) because your money was elsewhere.
zeroCalories
It's actually easy. Just sell and invest somewhere else.
IAmBroom
Not the same thing at all.
zeroCalories
Silly. You should be selling off th ese trash stocks. Don't know why people keep recommending market cap weighted funds when they're being manipulated by scam artists like Elon and Trump into making the world's retirement funds into bag holders.
datadrivenangel
Misleading because it shows % of total decline as opposed to each ones decline. The bigger the company the more points they have to lose..., so Oracle for example losing 20 points may be a smaller % decline on their part than a samller company that looses less.
alecco
All these, include the war and oil spike, and all the current liquidity dramas, will be historic rounding errors.
Boomers already started to burn their $78 trillions in savings. And taxes will skyrocket for the rest to pay their fat unfunded pensions. Oh, and don't forget giving them subsidized/free healthcare. And a last FU, they collude to rise rent (they are the landlord class).
But hey, they never forget to vote.
seydor
Where did that money go to ?
eep_social
US dollars or equivalents mostly, money market funds, treasuries, sgov, etc
fittingopposite
Gold and CHF
IAmBroom
Depending on your POV, some air was let out of the hype machine (inflated prices fell closer to reality), or the market withdrew its trust in actual value (devaluing it in real, instant dollars).
anon84873628
It was never really there to begin with.
The stock price is like the price on a restaurant menu. If you're the restaurant owner you don't make money just because you increase the prices on the menu. If you're a diner you don't spend money just by looking at menus in the window.
zitterbewegung
Stocks that were driving the market in gains for two years are now going down? Who would have thought that these stocks might have been overbought by people...
S&P in general has been giving returns in the past ten years ~12%. Seems like more of the same to me.
kingleopold
I like how they keep making BS names to create their financial engineering BS marketing and narrative going. so it's The Hateful Eight now what for this year and next? It used to be, FAANG, MAG7,ZIRP this, ZIRP that, Gamestop reaching to their FT stories and every news reporting at same week and so many made up BS from finance engineers.
Media is ready to lie to you and feed you BS, just waiting order(s) from finance dep.
arcanemachiner
Unlike Mag 7, Hateful 8 doesn't really strike me as a term of endearment...
seydor
Unless you re a shortseller
esseph
If it includes Oracle, it tracks
didip
Just QQQ and chill. You get all of the hardware companies monster gains to offset the losses.
Point taken but I think it's a bit of a fallacy to frame this way. The market can go up and down as can individual stocks; "85% of the decline" doesn't make sense because some stocks are going up.
A book I read a few years ago put this more eloquently. Some governor said that 20,000 jobs were created last month and his state contributed half of them. Well, many states lost jobs and the state next door actually gained MORE jobs, so the "more than half" framing makes no sense