Jim's Nasdaq100 Special as a basket. Message Board

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Strategies & Market Trends : Jim's Nasdaq100 Special as a basket.

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To: stockycd who wrote (1433)	10/26/1999 9:20:00 PM
From: James F. Hopkins	Read Replies (2) of 2103

Chris; My DVI put me short Friday..then this DOW thing blew it all to crap..but now I would say it's short again. That bringing MSFT & INTC into the DOW shookup a lot of people. =--------------- I just finished weighting the DOW with them in it as of the close ( it's price weighted not cap weighted ) Any way it closed at 10302.13 ...and if msft , intc, hd , and sbc were tossed in it tonight and the others took out it would open at 10630.53 in the morning. -------------- What does this mean ? Well it could mean several things and I bet some money managers are burning the night oil it looks like the arbitragers have to sell some of the rest of the DOW stocks to make the fit. ( as it stands now ) But Buying the MSFT and INTC will gap it up Monday as I don't think they re-weight it till after the close Friday. Todays weight would have you with 5.066985 shares each of the old stocks, but only 4.910453 of the new ones, to get the same close price. In other words the same close price would take less shares per unit if it were with the new entry's to get the same end result. They may do this with shorting then covering latter then they may just decides to run the dow stocks on up and use less of msft and intc and HD..but I doubt that.. Damm if I know..but I will like the DOW better after the smoke clears. -------------- The old market cap of the total as of today was 2641 Billion The new one if put in today would bring it to 3464 Billion. ----------- The news is all wrong about this move making it more Volatile..it won't ( the market may get more volatile) but it won't be because of this change ( after the smoke clears the Dow will be more stable ) ----------- The way the Dow is weighted the smaller caps are what makes her more volatile as each one dollar move in any stock moves the index the same amount ( it's not like the S&P or NDX or Naz ) nor like the NAV of a mutual fund it's price weighted and the smaller caps in the DOW with their smaller float that tend to jerk it around. -------------- With the Dow the tail often wags the dog. It's far easier to move the price of something like UK or GT with their 6 and 8 billion market cap , than it is to move GE or MSFT with over 400 Billion in cap each..however in the Dow stocks like UK or GT , effect the index just as much per dollar move as the big boys. -------------- Even SBC has 89 B in cap and it's the smallest of the new ones..anther thing that will help the Dow is when DD actually brings in UK..it's cap goes up. Actually we are only tossing 3 out the other one is staying by proxy. Then when Exxon brings in Mobil that cap will be represented by the DOW , it's 73.80 Billion and CHV leaving is only 57.72 B so we are not really cutting back on oil exposure. When the mergers are final the DOW will have the largest Market cap it ever had with the smallest stock in it holding about 20 Billion in cap. ---------------------- The tail may still wag the dog at times but not as much as in the past. Jim

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