Rob Arnott: Adding Tesla to the S&P 500 cost investors 41 basis points (0.41%)

Rob Arnott of Research Affiliates found that adding Tesla to the S&P 500 was bad for investors, because it was such a large addition to the index at such a high valuation.

Arnott and his colleagues estimate investors Tesla caused a drop in performance of 41 basis points (0.41%) compared to if Standard and Poor's had not added Tesla.

He says this type of buying high and selling low is typical for capitalization weighted indexes.

Short article, 8 pages. Worth a read.

https://www.researchaffiliates.com/content/dam/ra/documents/832-revisiting-teslas-addition-to-the-sp500.pdf

typo edit