Post by @lennardvanotterloo@mastodon.social
This analyst's report from Apollo about AI uses the term "S&P 493" to refer to the "S&P 500 minus the Mag 7" - because if you take out the AI companies, the S&P 500 is tanking. https://www.apollo.com/wealth/insights-news/insights/daily-spark/no-signs-of-ai-payoff-outside-the-tech-sector
@pluralistic It was always peculiar to use the S&P500 as a measure of American business health because fewer than 10 firms paper over the cracks of probably over a hundred duds and possibly 200 mediocre performers.
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@lennardvanotterloo @pluralistic I would be cautious, however, to use the S&P493 as a measure of non-AI business. Or the Mag7 as a measure of AI business.
Firstly, many AI companies, including OpenAI and Anthropic, are neither in the S&P500 or Mag7.
Secondly, some Mag7 constituents, such as Apple, have fundamentals that are only moderately influenced by AI.
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@lennardvanotterloo @pluralistic
That's a feature, not a bug. Wall Street is a game of convincing people with money to put the money into the market because the market will beat inflation. Aside from a small minority of contrarians, everyone benefits from using optimistic metrics that keep the narrative of growth alive as long as possible.
(See also, the reclassification of the Finance sector in the early 90's which has kept American GDP growing on paper even as the real economy has stalled)