News & Our Thinking

When investors talk about “The Market,” they are usually referring to the S&P 500. But with a small group of large technology companies exerting increasing influence, the index may not tell the full story.

In this short video, Ward Brown compares the traditional S&P 500 with its equal-weighted version and examines the extraordinary spending behind artificial intelligence. He also discusses SpaceX, one of the world’s largest public companies but not a member of the S&P 500. Ward closes by explaining why diversification and disciplined due diligence remain essential.

Transcript

Hello, I’m Ward Brown. If you take a look at the screens behind me, they’re pretty busy for a reason. Lately, the market has been pretty manic.

But when people say the market, they usually mean the S&P 500. And today, that can give a surprisingly incomplete answer. The traditional S&P 500 is market-cap weighted. That means the bigger the company, the greater its influence on how much the index moves up or down on any given day. The equal-weighted S&P 500 owns the exact same 500 companies, but each stock is equally weighted and equally impacts the daily movement. Why does that matter? And how does the recent SpaceX IPO fit in? Let’s take a look.

Technology now represents almost 40% of the traditional S&P 500 compared with about 15% of the equal weighted index. In addition, the 10 largest companies account for more than a third of the traditional S&P 500, the largest amount since the dot bubble. So increasingly, when we’re talking about the market, we’re really talking about technology stocks.

That helps explain why recent trading has felt like a pinball machine. One day it’s technology and AI stocks and the next day it’s banks, industrial companies, consumer businesses, healthcare, and everything else. It’s become fair to ask, is today a technology and AI day or is it an everything else day?

Comparing the traditional and the equally weighted S&P 500 usually provides the answer. Investors are also wrestling with the enormous sums being spent to build out the infrastructure behind artificial intelligence. Amazon, Google, Meta, and Microsoft are committing extraordinary amounts of cash to data centers and computing capacity. These are among the largest and best-run companies in the world and they weigh on the index a ton. But investors still need to know when will that spending generate an acceptable return and how large will that return be.

SpaceX adds another fascinating wrinkle. The company went public in June in the largest IPO in history and at the time of this recording is valued at roughly $1.6 trillion. Yet, SpaceX is not even in the S&P 500. That means one of the world’s largest public companies is completely absent from the index most people use as shorthand for the market.

SpaceX is compelling for obvious reasons. reusable rockets, Starlink, government defense contracts, and exposure to artificial intelligence. Very few companies sit at the intersection of so many current trends. Aerospace, telecom, national security, and AI. That also makes it extraordinarily difficult to value. SpaceX reported nearly $19 billion of revenue in 2025, but also a net loss approaching $5 billion at a valuation that has moved by hundreds of billions of dollars in a matter of weeks. Much of the investment case depends on results that may not arrive for many years.

At Argent, we initially considered taking a very small position, but ultimately we decided not to proceed until we could better understand the company’s operations, segment economics, capital requirements, and financial results. That was not a dismissal of SpaceX. It’s a remarkable company, but intrigue is not a substitute for due diligence. The same principle applies to AI and technology more broadly. We want meaningful participation in innovation, but we do not want a single narrative determining an investor’s financial future.

Diversification can be frustrating when the largest technology companies continue to outperform. But it also provides resilience when valuations, execution, or market leadership eventually changes. And it always does, it always has, and it always will. The objective is not to own less of the future. It is to own the future in the right proportion with enough evidence to understand what we own. Thanks for watching.

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