SNP1 strategy

See this month’s #1 and backtest the rule against SPY. The rule: hold only the largest US company by market value, check the ranking on the 1st of each month, and switch only if #1 has changed.

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How to read this

A concentrated bet. It works in some decades and fails in others.
Why a company is #1. Usually because its price has risen. Holding it is a bet that the rise continues.
A good recent record. Treat it as a feature of the period, not proof of the rule.

What a long study found

The study. Michael Mauboussin and Dan Callahan at Counterpoint Global studied US stocks from 1950 to 2023 using CRSP data.
Full period. They report that owning the largest stock trailed the S&P 500 by about 4.3 percentage points a year.
2014 to 2023. They report that it beat the S&P 500 by about 14 points a year.
2000 to 2013. These years were poor. The largest companies then were Microsoft, General Electric and Cisco.

Figures in this box are as reported in “Stock Market Concentration” (Counterpoint Global, Morgan Stanley Investment Management, 2024). They are not recomputed here.

Survivorship bias

Researched after the fact. The ranking table uses sources that are easier to find for companies that are still large today.
Delisted companies are missing. Prices come from a source that drops them.
The effect. Both make the past look more orderly than it was at the time.
SNP1 is less affected. No company that reached #1 since 2000 has been delisted. The top-7 variants are affected more, and rows marked unsure matter more there.