Kendall re :Market performance.. here is a similar article,
Along with a record high for the NASDAQ composite,
which closed Friday up 22.14 points at 3369.25 (its 13th
record in 16 trading sessions), the S&P 500 index also hit a new high last Thursday, the same day that the DJIA closed
above 11,000 - it's first close above this lofty number in
two months. While these record numbers may appear
impressive, don't put too much "weight" into them!
The Dow Jones is "price-weighted," which means the index
ignores the market values of different companies and
instead gives the most weight to companies with high share
prices. For example, a $100 stock would get twice the
weight of a $50 stock. As a result, through September the
Dow was up 12.6%. Were it "cap-weighted," as it should be
(like the S&P and the NASDAQ) it would have been up
only 4.5%.
But there's also a problem with "cap-weighted" indexes. For
example, for the quarter ending September 30, some 65
individual tech stocks in the S&P 500 accounted for just
under 25% of the index's capitalization. If not for these tech stocks, the S&P index would be down 9% for the third
quarter and down 1% for the year at that time! According to
a recent Wall Street Journal article, less than half the
NASDAQ stocks are actually up for 1999, despite the
index's huge overall gains.
IMHO we're going higher my friend... N.C. |
