Ask a Fool: What is the S&P 500?

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The S&P 500 (INDEX: ^GSPC  ) is a capitalization-weighted index whose components are weighted by the total market value of outstanding shares. Because it's weighted this way, companies that are disproportionately larger -- like Apple (Nasdaq: AAPL  ) and Exxon (NYSE: XOM  )  -- have the most influence over the index, while those on the smaller end, like MAKO Surgical (Nasdaq: MAKO  ) and First Solar (Nasdaq: FSLR  ) , have a much lower weighting. In the following video, Fool.com analyst Austin Smith goes over everything that investors need to know about the S&P 500.

 

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Austin Smith owns shares of Apple and MAKO Surgical. The Motley Fool owns shares of Apple, MAKO Surgical , and ExxonMobil. Motley Fool newsletter services recommend Apple, First Solar, and MAKO Surgical . Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 25, 2012, at 12:41 AM, PepeShalamar wrote:

    I was surprised to see this article on The Motley Fool, considering how many errors are in the article. Not sure where the author of this article got his information from.

    The S&P 500 is a stock market index containing the stocks of 500 American Large-Cap corporations. The S&P 500 index is NOT made up of the 500 largest corporations in the U.S.

    In 2005, the Index was changed to be "float" weighted - the index weighting is determined by the amount of shares available for public trading.

    It's great that The Motley Fool owns 3 of the 4 stocks mentioned in the article. Won't be using this site as a reference for anything anymore.

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