The Motley Fool Discussion Boards Previous Page Stocks B / Berkshire Hathaway URL:  https://boards.fool.com/how-can-spy-only-be-up-by-12-if-the-companies-30545700.aspx Subject:  Re: Haven't heard that BRK is underperforming S& Date:  2/16/2013  9:40 AM Author:  physdude Number:  198709 of 247661 How can SPY only be up by 12% if the companies that have a high weight in it outperformed BRK, which is up 22% ? Doesn't add up.I am sure Jim will give you a better and more detailed answer than mine but I think he means that the equal weighted average return is 22%.The confusion seems to be arising from the fact that the S&P 500 is a value weighted average. For example, consider a stock market with just 2 stocks - A & B. A has a market cap of \$100 billion while B has a market cap of just \$10 billion. Assume that A has just returned 10% over the last year while B has returned 30%. Then the value weighted average (equivalent of the S&P 500) return would be (100/110)*10 + (10/110)*30 = 11.82% while the equal weighted average (the equivalent of the average company's return) would just be 1/2*10 + 1/2*30 = 20%. The difference between the 12% and 22% is because small cap stocks in the S&P 500 (a bit of an oxymoron?) have done much better than the large cap ones. Interestingly, a glance at Ken French's website tells me that SMBlast year was only 0.59% so this apparently was not true for the broader market. Copyright 1996-2020 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us