If you're looking for just one stock to own, it's tough to beat SPY stock, or the SPDR S&P 500 Trust (SPY). Just one trade instantly exposes you to the entire market and S&P 500 at a very low cost. But should you buy it with the market rallying this year?
Want to own Microsoft stock (MSFT)? And Apple stock (AAPL)? Also Alphabet (GOOGL)? All the top tech stocks are in there. And what about top consumer brands like Disney (DIS), Walmart (WMT) and now Tesla (TSLA)? Yes, those are in the SPY, too. In fact, if you buy SPY stock you instantly own all the hottest stocks in the Standard & Poor's 500. Just like that. No matter who wins, you win.
What is this one stock that owns all?
What Is SPY Stock?
SPY is an exchange-traded fund that owns all the stocks in the Standard & Poor's 500 index. The S&P 500 is arguably the most important market measure used by investors and traders around the world — as it's the benchmark for trillions in dollars of investment.
The S&P 500, created in 1926, tracks the rise and fall of the largest 500 stocks trading on U.S. exchanges. And the S&P 500 is widely seen as the definitive measure of the U.S. stock market among most investors due to its superiority to rivals.
What Are The Top 10 Holdings In SPY?
Since SPY stock owns all the stocks in the S&P 500, its holdings are an open book. And SPY gives greater weight to stocks with bigger market values, so you can know what its top holdings are at any time.
It's important to note that SPY weights stocks based on the value of stock available to trade. This mean it's dominated by the very largest companies. Just the 15 most-valuable stocks in SPY stock account for roughly a third of its value. And now two companies claim more than than 5% of SPY stock.
Why Is The S&P 500 Better Than The Dow Jones?
The Dow Jones Industrial Average is often cited in market chatter. But the S&P 500 is seen as the true and accurate benchmark of U.S. stocks. Quirks in how the Dow Jones is calculated limit its appeal as a true gauge of stocks. And the S&P 500 is a better measure of the market, for instance, because it:
Is broader: The S&P 500 holds 500 stocks to the Dow Jones' 30 holdings.
Is more fully representative of "the market." The S&P 500 gives greater weight to companies with the most value trading in the market. This is arguably a superior method to the Dow's. The Dow weights stocks based on their per-share prices. This makes no logical sense, as UnitedHealth (UNH) shouldn't be given multiple-times more influence than Walmart (WMT), simply because it trades for more than $510 a share and Walmart just $160. The S&P 500 weights them about the same, as they're both valued at around $400 billion.
Is more rules-based. The S&P 500 relies less heavily on human intervention. Changes are made to both the Dow and S&P 500 as stocks are put in and taken out. And humans are involved in the selection process with the S&P 500 and the Dow. But since the S&P 500 owns nearly all large U.S. stocks, there is less judgment in what goes in and what comes out.
If you're a long-term investor, any time is a good time to buy SPY stock. Given how diversified it is, SPY is the ultimate "set it and forget it" stock. Over the long term, the S&P 500 has returned 9.9% a year on average since 1928 including dividends, says IFA.com. You would be hard pressed to find many better, low-cost plays you can hold onto forever. Keep in mind, too, if you buy and hold SPY stock you will receive the quarterly dividend payment.
Even famed investor Warren Buffett often recommends investor buy and hold the S&P 500.
As such, just continue to dollar cost average at this price if you can and hold it long term.
@MillionaireTiger @TigerStars @Daily_Discussion @TigerEvents
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