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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club

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To: Lars who wrote (4265)4/5/1999 4:53:00 PM
From: sea_biscuit   of 15132
 
All :

...2 weeks ago when Bob commented on
Nasdaq 100 symbol QQQ; Bob said MCI, Dell, INTC and MSFT make up 40% of the value;
Bob said he will comment further in April newsletter which comes out soon; QQQ trades at
5% of index; Bob said if you want to buy this make sure you DCA into it.


QQQ is a "modified capitalization-weighted" index. i.e. if ever any of the components exceeds 24% of the index, the index will be rebalanced by selling just enough of the component's shares until it falls to 20% of the index. Also, if the total of all those components that exceed 4.5% of the index goes over 48%, there will be a rebalancing exercise that will ensure that the total weight is brought down to 40%.

Does anybody have any comments on this? Speaking for myself, I do like the "buy low; sell high" effect that the rebalancing will have.
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