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Technology Stocks : EMC How high can it go?
EMC 29.050.0%Sep 15 5:00 PM EST
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To: TigerPaw who wrote (6692)6/11/1999 9:42:00 AM
From: GVTucker  Read Replies (2) of 17183
 
TP, RE: Now these few companies make up 5% or so of asset value, out of line with normal parameters. The Y2K was taken as an appropriate time to rebalance their asset portfolios. They are selling millions and millions of shares to get back in balance.

This makes no sense to me. Active fund managers have a turnover of greater than 100% a year on average, so the only likely candidates in this scenario would be index funds. And the most prominent index fund for EMC would be S&P 500 Index funds. For example, the 4th largest holder of EMC stock, BZW Barclays (14mm shares), is almost solely an index manager.

The reason your logic doesn't make sense to me is that the S&P 500 is a capitalization weighted index. Thus, as EMC has risen over the past few years, the weighting that the index managers must hold in EMC has also risen. No selling is necessary to be 'back in balance.'

There is unquestionably fund selling of EMC this year. In the first quarter, sellers in the top 10 holders sold about 12mm shares of EMC. (2Q numbers will be out around the middle to the end of August.) But the reason for this selling is just a fundamental assessment of EMC's prospects and its valuation. Whether this assessment is right or wrong will be quite evident by year end.
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