The secret to the S&P 500 index always reaching new highs:

Automatically embracing the strongest sectors, automatically abandoning the weak.
Honestly, I only fully understood the S&P 500 today.
Last night, the index hit a new high again, and I looked at a few leading stocks:
Not a single one hit a new high, many even dropped like hell.
After careful research, I found out this is a huge trap.
It’s completely different from the logic of the Shanghai Composite Index.
**The truth is:**
The S&P 500 is not a simple average of 500 companies, but a **market cap-weighted index**.
The larger the market cap, the greater the weight, the more say it has.
• Nvidia, one stock, has a weight close to 8%
• Nvidia + Microsoft + Broadcom + Apple and a few others make up over **20%** of the S&P 500’s weight
When they rise, the index rises;
When they hit new highs, the index hits new highs.
The remaining over 490 stocks, even if they move sideways, fluctuate, or even plunge, can’t drag down the index at all.
**A more ruthless mechanism is:**
Stock price rises → Market cap increases → Weight automatically increases
Stock price falls → Market cap decreases → Weight automatically decreases
The S&P 500 is inherently:
**Always automatically embracing the strongest sectors, automatically discarding the weak ones.**
Today, AI lifts the index,
Tomorrow, a new sector takes over, and it continues to rise.
So, in theory, it can **always hit new highs**,
While most individual stocks can **never hit new highs forever**.
**The most heartbreaking conclusion:**
A new high in the S&P 500 doesn’t mean the market is good,
It only shows that a few super giants are really strong, and the market is always embracing new hot spots.
Watching the index to trade stocks is the easiest way to be completely misled.
#标普500 #US stocks #投资 #A-shares comparison