The S&P 500 Just Swapped Out 3 Companies. Should Investors Buy on the News?

On Dec. 23, the S&P 500 added Live Nation Entertainment (NYSE: LYV), Zebra Technologies (NASDAQ: ZBRA) and Steris (NYSE: STE) to its index of 500 of the largest U.S. public companies. To add these three, three others got the boot. The market capitalizations of Affiliated Managers Group (NYSE: AMG), TripAdvisor (NASDAQ: TRIP), and Macerich (NYSE: MAC) have fallen, which led to these companies no longer rating as S&P 500 material.

Analysts have noticed that stocks temporarily jump in price upon being added to the S&P 500 index. But we're interested in the only term that really matters: the long term. Being added to an index doesn't make a stock a winner any more than being removed makes a stock a loser. In fact, I think TripAdvisor could still surprise investors with an upside return moving forward. Additionally, I believe Zebra Technologies can beat the market going forward -- demonstrating market beaters can come from both among and outside S&P 500 companies.

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