What is the S&P 500? Who are the Members Today? Who Were the Original Members of the S&P?

Growing up, my parents almost exclusively listened to boring A.M. news stations in the car and I can distinctly remember hearing every 11 minutes (1010-wins for anyone from NY?) that the S&P was up or down a certain percentage.  While I almost can’t help but run into this number daily I don’t think there are many people who actually know what the S&P 500 is nevertheless what companies constitute the index.

What Is the S&P 500?

The S&P 500 is a basket or index of approximately 500 stocks that is monitored and updated every 15 seconds by Standard&Poor, the company that owns the trademark behind the S&P500.  Standard & Poor’s provides a brief definition/pat on their back,

…[The S&P 500 is] the best single gauge of the large cap U.S. equities market since the index was first published in 1957. The index has over US$ 4.83 trillion benchmarked, with index assets comprising approximately US$ 1.1 trillion of this total. The index includes 500 leading companies in leading industries of the U.S. economy, capturing 75% coverage of U.S. equities.

While the guide to choosing members of the S&P Indexes (Free Guide) is approximately 25 pages, Wikipedia sums it up nicely for the S&P500,

The committee selects the companies in the S&P 500 so they are representative of the industries in the United States economy. In addition, companies that do not trade publicly (such as those that are privately or mutually held) and stocks that do not have sufficient liquidity are not in the index. For example, Berkshire Hathaway has a market capitalization larger than nearly all members of the S&P 500, but its extremely high stock price (over $100,000 for its more valuable Class A shares as of January 2011^[9]) makes it very difficult to trade and so the committee excluded Berkshire from the index for many years. However, S&P ultimately put Berkshire’s lower-priced Class B shares into the index, replacing BNSF Railway, which Berkshire acquired. This followed Berkshire’s decision to split the Class B shares 50-to-1, which made those shares worth ¹⁄₁₅₀₀ of an A share.By contrast, the Fortune 500 attempts to list the 500 largest public companies in the United States by gross revenue, regardless of whether their stocks trade or their liquidity, without adjustment for industry representation, and excluding companies incorporated outside the United States

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The index has traditionally been market-value weighted; that is, movements in the prices of stocks with higher market capitalizations (the share price times the number of shares outstanding) have a greater effect on the index than companies with smaller market caps.

The index is now float weighted. That is, Standard & Poor’s now calculates the market caps relevant to the index using only the number of shares (called “float”) available for public trading. This transition was made in two steps, the first on March 18, 2005 and the second on September 16, 2005.

In order to keep the S&P 500 Index comparable across time, the index needs to take into account corporate actions such as stock splits, share issuance, dividends and restructuring events (such as merger or spinoffs). Additionally, in order to keep the Index reflective of American stocks, the constituent stocks need to be changed from time to time.

To prevent the value of the Index from changing merely as a result of corporate financial actions, all such actions affecting the market value of the Index require a Divisor adjustment. Also, when a company is dropped and replaced by another with a different market capitalization, the divisor needs to be adjusted in such a way that the value of the S&P 500 Index remains constant. All Divisor adjustments are made after the close of trading and after the calculation of the closing value of the S&P 500 Index

Who are the Current Members of the S&P 500?

A large percentage of the members of the S&P500 are likely to be familiar with it as they are the biggest companies in the United States.  The current members of the S&P500 (as of May 24, 2011) are:

It is weird to see a company named one of the biggest in the United States and have no idea what they even do!

Who Were the Original Members of the S&P 500?

I was shocked at how hard it was to find the original constituents! Shocked.  I am not sure why S&P wouldn’t provide the history of the members front and center. Maybe it has to do with how few companies still exist in the original list.  Or because the members themselves don’t mean that much to those doing research?  But I did find the list from a fellow blogger, JLP, who complied the list from the index of a book he owns:

Considering I only know a handful of the companies it would probably be a fun exercise to figure out what happened to each one (i.e. bankruptcy, merger, takeover, went private, gov’t break up).

I took a quick peak at Zenith Radio since I sort of remember having a Zenith Television when I was much younger.  Apparently, Zenith was an American powerhouse in the electronic field from 1918 till about 1980 when they started to lose market share to Japanese competitors.  They were eventually swallowed up by LG Electronics (part in buy out and part during bankruptcy).

Do any of the original names bring back nostalgic memories?