The surprisingly lucrative business of making a list of 500 stocks

From 1989 to 2019 David Blitzer chaired the committee that decides which companies belong in the S&P 500, meeting monthly to evaluate the 500 largest public companies. The S&P 500 functions as the primary stock-market barometer and underpins many retirement investment plans. S&P Global, which creates the index, is itself a member of the index and earns hundreds of millions annually from the S&P 500 through its indexing business. That indexing business is highly profitable and faces limited erosion from competitors. As a result, millions of Americans' savings are indirectly concentrated in a handful of dominant tech firms and their AI investments.

"Once a month, from 1989 to 2019, David Blitzer walked into a well-appointed conference room with a view of downtown Manhattan to discuss the 500 largest and most important public companies in the U.S., the ones whose stock just about any American can buy. Blitzer was a member of, and then chair of, the committee that makes the S&P 500. It's like the Billboard Hot 100, except instead of ranking the most popular songs in America, it lists the most valuable companies."

"The S&P 500 is famous. It's cited constantly in newspapers and on TV; it's the basis of millions of investing-for-retirement plans. Less well-known is that S&P Global, the company that makes the S&P 500 and that employed Blitzer, is itself on the S&P 500 list. One reason why is that S&P Global makes hundreds of millions of dollars every year in revenue just from the S&P 500. The company has other larger businesses, like rating bonds, but its indexing business is particularly lucrative and profitable."

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