What is the S&P500 index?

The S&P 500 index, which stands for Standard and Poor's, actually shows a list of the top 500 companies in the American stock market and is considered as one of the important criteria in determining the state of the American stock market.

Calculation method

To calculate the market cap index or market value, the whole market is divided by a fixed number (DIVISOR). This fixed number will change over time depending on factors such as capital increase, addition and decrease of companies, etc. Currently, this number is about 8.3 billion dollars. (In many countries like Iran DIVISOR number is the amount of market cap on day 0 or market formation)

Notes about this index

• In the last 10 years, its average yield was about 8% per year.
• This index was introduced in March 1957.
• Currently, the market cap of the companies in this index is about 24.4 trillion dollars.

Every season, the companies in this index are reviewed, these companies must have the following criteria to be listed in the index:

1- Have a market value of more than 8.2 billion dollars.

2- The company is registered in America and the main office of the company is located in this country.

3- More than 50% of the company's shares are offered in the open market and are available to the public.

4- More than 50% of its fixed assets and cash flows are in America.

5- The price of each share is above 1 dollar.

6- Have at least 4 consecutive quarterly reports with positive profitability reports. (Tesla is not yet on the S&P list for this reason, as it has not yet passed this semester.)

And finally, the 10 big companies that are in this index are:

• Microsoft Corp.
• Apple Inc.
• Amazon.com Inc.
• Facebook Inc. A
• Berkshire Hathaway B
• Alphabet Inc. A (GOOGL)
• Alphabet Inc. C (GOOG)
• JP Morgan Chase & Co.
• Johnson & Johnson
• Visa Inc. A