6 companies = 26% of S&P 500 market cap

[ergophobe]

https://apple.news/A2Rj4rTh6SBiXkXVEhaml-g

Apple, Microsoft, Alphabet, Amazon, Tesla, Meta

Also, their P/E is roughly 3x the index average.

All this combines to make the total market appear more overheated than it likely is and serves to highlight just how overheated those stocks probably are.

The author's analysis also shows that in every of the last four decades, 70-80% of the top ten stocks are not in the top ten at the end of the decade

[rcjordan]

>their P/E is roughly 3x the index average.

I wonder what the P/E average of the remainder of the index without the top 6 would be?

[ergophobe]

>>without the top 6

Is that figured on a per-company basis or weighted by market cap? If it's per company, then getting rid of six outliers doesn't change much. If you weight by market cap it does.

So to get a rough guess of the average P/E for companies other than the top six, it should simply be...

6 companies have a p/e of 62 on average
500 companies have a p/e of 29.1 on average

So...

6*62 + 494x = 500*29.1
x = (500*29.1 - 6*62)/494 = 28.7

You can see that subtracting that 6*62 doesn't change the numerator much for average P/E of a company.