> If you take the Top 500 companies as an indicator how well your economy is doing, but everything is carried on the shoulders of only 1.4% of those 500 companies then what is the point of looking at the 500 companies in the first place.
It's valid to argue that success of companies in the S&P 500 is not evenly distributed, but if you really want to understand the impact of that distribution on the economy you have to look at the value of each company rather than treating them equally.
The top 7 companies might only be 1.4% of the companies in the S&P 500, but they represent roughly 35% of the market cap of companies in the index. Because of that, they have an impact on the broader economy much larger than the raw number of companies would suggest. "Just" Nvidia doing well is going to have a much larger economic impact than just Newell Brands, which I have never heard of but is apparently one of the smallest on the index. In fact Nvidia's market cap is roughly 1000 that of Newell Brands with presumably similarly disproportionate economic impact.
It's valid to argue that success of companies in the S&P 500 is not evenly distributed, but if you really want to understand the impact of that distribution on the economy you have to look at the value of each company rather than treating them equally.
The top 7 companies might only be 1.4% of the companies in the S&P 500, but they represent roughly 35% of the market cap of companies in the index. Because of that, they have an impact on the broader economy much larger than the raw number of companies would suggest. "Just" Nvidia doing well is going to have a much larger economic impact than just Newell Brands, which I have never heard of but is apparently one of the smallest on the index. In fact Nvidia's market cap is roughly 1000 that of Newell Brands with presumably similarly disproportionate economic impact.