Episode 002: Dr. David Blitzer, host Rick Ferri

Oct 5, 2018

David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, shares fascinating insights into the world of indexing. He discusses the merger of S&P and Dow Jones, the criteria for stock selection in major indices, and the evolution of the S&P 500's methodology. The conversation highlights the significance of the Global Industry Classification Standard and the recent reclassification of real estate into its own sector. Blitzer also analyzes the difficulties active managers face in outperforming the S&P Dow Jones Indices as index investing continues to rise.

Ask episode

Chapters

Transcript

Episode notes

Intro

00:00 • 2min

The Evolution of S&P Dow Jones Indices

02:23 • 10min

Evolution of the S&P 500 Index Methodology

12:34 • 12min

Understanding the Global Industry Classification Standard

24:19 • 4min

Reclassifying Real Estate: The Emergence of REITs as a Distinct Sector

27:56 • 3min

The Evolution of Technology and Communications in Investing

30:29 • 5min

The Rise of Index Funds

35:03 • 14min

David Blitzer is our guest in Episode 2 of Bogleheads on Investing. Dr. Blitzer is the Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices (S&P DJI) with overall responsibility for index security selection, as well as index analysis and management.

In this episode, Dr. Blitzer discusses how S&P and Dow Jones came together under one name to become S&P Dow Jones Indices. He talks about the way securities are selected for the Dow Jones Industrial Average and S&P 500, and how stocks are categorized based on Global Industry Classification Standard (GICS). Dr. Blitzer also explores how the indexing industry changed as index investing became popular. Last, he comments on the difficulties active managers have in outperforming S&P Dow Jones Indices.

Prior to becoming Chairman of the Index Committee, Dr. Blitzer was Standard & Poor’s Chief Economist. Before joining Standard & Poor’s, he was Corporate Economist at The McGraw-Hill Companies (now S&P Global), S&P DJI's parent corporation.

This podcast is hosted by Rick Ferri, CFA, a long-time Boglehead and investment adviser. The Bogleheads are a group of like-minded individual investors who follow the general investment and business beliefs of John C. Bogle, founder and former CEO of the Vanguard Group. It is a conflict-free community where individual investors reach out and provide education, assistance and relevant information to other investors of all experience levels at no cost.

The organization's free website is Bogleheads.org and the wiki site is Bogleheads® wiki. Bogleheads sites are operated by volunteers who contribute time and talent. Donations help defray operating costs.

Since 2000, the Bogleheads' have held national conferences in major cities around the country and currently meet in Philadelphia in the autumn of each year. There are 56 Local Chapters in the US and three Foreign Chapters that also meet regularly. New Chapters are being added on a regular basis.

This podcast is supported by the John C. Bogle Center for Financial Literacy, a non-profit organization approved by the IRS as a 501(c)(3) public charity on February 6, 2012.