Wednesday, August 6, 2008

S+P 'Weighting' Game - Financials Vs. Energy

Over the past 15 years (since 1993), the Financial sector has enjoyed a larger 'weighting' (a larger influence) on the performance of the U.S.'s S+P 500 index relative to the Energy sector. However, per the below chart, times are changing and changing QUICKLY.



The 'modern era' PEAK difference between the weighting of the 2 sectors looks like it occurred in 2004 when Financial-based stocks made up about 21% of the S+P 500 vs. Energy's 6%. If you'll recall this so happens to coincide with the PEAK of the U.S. Housing Bubble (coincidence ? I think NOT). Since 2004 there has been a HUGE reversal in this once 15 year trend...and the influence of Energy and Financial sectors on the S+P 500 are now almost IDENTICAL !


Anecdotally thinking, I wonder if we'll eventually see a return to the 1980 scenario in which Energy stocks account for 30% of the S+P 500 vs. the 6% weight of financials (1980...not as long ago as one might think !)


images.thestreet.com/tsc/common/images/storyimages


Data Courtesy: RealMoney.com