In a recent client conversation, we were discussing how dramatically the various sector weightings in the S&P 500 change over time. As an example, the Technology Sector currently represents about 35% of the index compared with about 18% fifteen years ago.
Going back to the 80’s energy, basic materials, healthcare, and industrials were among the largest sectors. Pharmaceutical companies in particular were viewed as the “must own” investments of the day. I still remember someone asking me about my job back then. When I said I was a portfolio manager, the person responded — completely seriously — “I own Pfizer and Merck… who needs anything else?”
That comment perfectly captured the mindset of many individual investors at the time. It is also a useful reminder that market leadership and investor enthusiasm are constantly evolving. The sectors and companies that appear indispensable in one era often look very different a decade or two later.
All comments and suggestions are welcome.
Denise M. Farkas, CFA
