I was thinking about the S&P500 the other day and I realised it doesn't necessary go up with the US economy. The S&P500 only goes up if the market cap of the 500 largest companies goes up. Theoretically if there was an economic shift towards small and medium size businesses the S&P500 could drop while the economy of the US overall could increase.
That got me thinking, in recent years digital communication technology has allowed companies to grow far beyond towns and cities, but to national and international levels. Because of economies of scale these companies have huge advantages over smaller local businesses so often they'll have their margins squeezed or they'll simply be put out of business.
Does anyone do how much has this shift towards large international companies benefited the S&P500 over the last 20 or so years? Do you think this trend will continue or slow? I'm wondering if perhaps the average 7~% return per year will become less likely going forward as these global companies run out of markets to expand into?
Submitted November 24, 2018 at 12:23PM by kriptonicx https://ift.tt/2PUMYqv
