Cramer stated the index supplier is “amazed” at how an organization the dimensions of Tesla could be added to the S&P 500
Tesla is entering the S&P 500 in December, but given the size of the electric vehicle maker, getting it into the index is no easy task, said Jim Cramer of CNBC.
“I think you are amazed,” he said Tuesday from index provider S&P Dow Jones Indices. “I really don’t think they know how to handle it … they can’t take out the little ones [company from the index]it doesn’t matter. If they make up for that … they seem to have to make almost everything smaller, “he told Squawk on the Street.”
During Tuesday’s early trading, Tesla surged more than 9%, increasing its market cap to $ 415 billion. This makes it one of the ten most valuable companies in the S&P 500.
S&P Dow Jones Indices, aware of the challenge of adding such a large company, said Monday night it was considering adding Tesla to the index in two tranches. Contrary to custom, the index provider did not announce who will replace Tesla.
Tesla’s inclusion in the benchmark index further focuses the S&P 500 on just a handful of names that Cramer said won’t do young investors any good.
“The S&P 500 is old-fashioned for these people,” he said of young investors. He noted that young retail investors, more involved in the market than ever, are preferring to buy single names that they believe will outperform.
“You see a lot of these younger investors saying,” They know what I’m going to pick as the best of the best, and this index doesn’t necessarily represent what I want what a piece of America is, “he said.” I think “The younger folks are not fooled … they like ETFs, but they like to buy individual stocks that they think are right and that has been their pattern.”
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