Ever wonder how the Standard & Poor’s 500 (i.e. S&P 500) actually works? There’s a wizard behind the curtain, and his name is David M. Blitzer.
As the Wall Street Journal notes, the 68-year-old Blitzer is the managing director and chairman of the Index Committee, which “determines the makeup of the S&P 500, one of the most popular and widely tracked benchmarks in global financial markets.”
Changes that get made to the index, which has nearly $8 trillion attached to it, are not made lightly. “It’s not a bunch of people sitting in a room throwing darts at the wall or flipping coins,” Blitzer tells the Journal. “When it’s a big surprise and one of your colleagues writes, ‘I don’t know where they got that from,’ it doesn’t do any good for us.” (If you’re interested, the committee published its methodology last month.)
The latest change Blitzer is overseeing is whether the telecom sector should stay or go. Per the Journal, “telecom has steadily shrunk over the years as companies have merged or spun off businesses, with its share of the S&P 500’s market capitalization falling to 2.3 percent this year, according to S&P Dow Jones Indices, from 8.7 percent in 1990.”
He’s been part of the committee since ’89 and has headed it up since ’95.
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