The S&P 500 Pop Is Back From the Dead

Americans place a premium on elite and exclusive institutions. Many of us want to get into top-tier universities, pledge storied fraternities and, upon graduation, attain membership at Soho House. And for most of recent history, we have also been more than happy to pay more for a stock just because it got into the prestigious S&P 500 Index — the Skull and Bones of corporate memberships.

Admittedly, that changed for about four or five years in the late 2010s, but human nature is now reasserting itself. My analysis of data going back to 2015 makes clear that the S&P 500 inclusion premium has risen from the dead. The resurrection bears the fingerprints of a newly influential group of retail traders who are changing the role of individual investors and making markets more unpredictable.