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Happy New Year BRK fans,

Toward the beginning of every new year I go through all my portfolios and investing files to update dates, prices and statistics from a large array of sources. Most of the nitty gritty I get from the dbase in SI Pro. Anyway, while updating the sector weightings of the S&P 500, I noticed a few things. The first thing that caught my eye is that the largest industries represented in the SP500 look like the map for someone’s weekly To-Do list. Either that or an outline for a cheap, but very up-to-date novel. Everything we do that seems to be a current topic of discussion regarding change and changing focus seems to be appropriately represented in the index.

Following are the top 20 industries (as a percent of the index by market cap) in the SP500.

Rank Mcap(b) % of SP Industry
1 2,576 9.0% Online Services
2 1,816 6.4% Software
3 1,598 5.6% Pharmaceuticals
4 1,562 5.5% Banks
5 1,295 4.5% Phones & Handheld Devices
6 987 3.5% Semiconductors
7 935 3.3% Department Stores
8 845 3.0% Multiline & Brokers
9 724 2.5% Electric
10 708 2.5% Aerospace & Defense
11 675 2.4% Refining and Marketing
12 663 2.3% IT Services & Consulting
13 659 2.3% Medical Equipment, Supplies & Distribution
14 652 2.3% Broadcasting
15 596 2.1% Advanced Medical Equipment & Technology
16 523 1.8% Managed Health care
17 499 1.7% Personal Products
18 462 1.6% Non-Alcoholic Beverages
19 406 1.4% Food & Distribution
20 382 1.3% Industrial Conglomerates

As we age, we need more medical services (#3, #8, #11, #15 and #16 above), especially when we’re all tripping over something or someone because we were walking down the street with our face buried in our newest, shiniest cell phone (#1, #2, #5, #6, #12) And as the world shrinks, we need more national spending for defense ‘cause we’re all worried about TheOtheGuy and who’s climbing over the southern Wall. At least we do spend more on defense; whether we need it is a topic maybe better suited to a Political Poo or Combat Arms board. (#10)

Of course we still need money to eat (#19) and live, although the definition of money is surely changing, and maybe we should call it a source of wealth instead of money, since we seldom have to go to the actual bank any longer (#4, #11)) nor carry physical paper money. We can just invest in the financial markets (#8, #1, #2, #5, #6, #12, #14) and have the digits shipped to our bank (#1, #2, #4, #5, #8) any time we want.

Now for some reason Amazon didn’t wipe out at least 1 department store yet (#7) – “huh, we missed one”— so we can still drive (#7, #11) to that one department store (#7) and buy anything (#17, #18, #19) that Amazon doesn’t sell (what the heck is that?). All these technological things we do run on electricity and batteries, (#9, #11) the loss of which would render us truly helpless.

I hope you agree that a lot of our current focus is represented pretty well by these top 20 industries found in today’s version of the S&P 500 index. There are a couple of other things I wanted to mention while I have your semi-attention. First, the fastest growing industry (by % of S&P MCap, which isn’t necessarily the same as the “fastest growing” at all) is not to be found in the top 20 firms in the index. That particular industry fits right in with the rest of these, however; Entertainment Production. No surprise there.

The second thing is, for anyone foolish enough to be keeping score, that one of the industries on the list didn’t fit into my “story.” At least not until now. I just decided* I’m going to sell some of my software rockets and buy a few Berky.B’s to start the new year. So that’s (#20) and … hey, we’re done.

Hope you all have a great year.

Dan

• ouch, speaking of wealth sources, I may wait for a sale. Maybe Mungo will flood the market one of these days. (hint)

ps: Apple and Microsoft dominated the index in 2019. Normally I would suggest one might consider buying an equal-weight version instead of the S&P500 — unless you are that one investor besides me that still doesn’t own shares of Apple and/or Microsoft. But maybe they will rule the roost again. Darn it! Right under my nose and I missed ‘em both. Argh.
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