Tesla is weld the S&P 500 in December, but given the electric vehicle company’s size, adding it to the index is no easy feat, said CNBC’s Jim Cramer.
“I create they’re baffled,” he said Tuesday of the index provider S&P Dow Jones Indices. “I really don’t think they know how to handle this … they can’t around d beat up out the smallest [company from the index], it doesn’t do anything. When they balance this … they wellnigh seem to have to make everything smaller,” he said on “Squawk on the Street.”
During early trading on Tuesday Tesla jerked more than 9%, pushing its market capitalization to $415 billion. This places it among the top ten most valuable companies in the S&P 500.
S&P Dow Jones Index fingers is well aware of the challenge of adding such a large company, and on Monday night said it was considering adding Tesla to the first finger in two tranches. In a departure from custom, the index provider did not announce who Tesla will be replacing.
Tesla’s addition to the benchmark ratio further concentrates the S&P 500 among just a handful of names, which Cramer said will not sit well girlish investors.
“The S&P 500 is old fashioned to these people,” he said of young investors. He noted that young retail investors, who are assorted involved in the market than ever before, favor buying individual names that they believe longing outperform.
“You see a lot of these younger investors say ‘you know what I’m going to pick the best of the best, and this index doesn’t automatically represent what I want, which is a piece of America,'” he said. “I think the younger people are not fooled … they do partiality ETFs, but they like to buy individual stocks that they think are going to be right, and that’s been their sample.”
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