Semi-Equips - Buy when BLOOD is running in the streets! Message Board

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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets!

LRCX 173.79

-1.2%

Dec 30 3:59 PM EST

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To: Jerome who wrote (8277)	3/15/2000 10:10:00 AM
From: Clarksterh	Read Replies (2) of 10921

Jerome - This bodes very well for AMAT and KLAC that are part of the S&P 500. Stocks that have rallied very sharply in the last three months are now a bigger part of the index than value stocks that have become a less important part. Because of this re adjustments will be necessary. Incorrect. Index funds are Market Cap weighted - they aim to own the same percentage of total market cap for every company they own (although there are some limitations when much of the liquidity is tied up with non-index investors). Thus if there are 2 stocks with equal market caps, but one was at $50 per share and the other at $100 it would own twice as many of the shares of the $50 stock, but the same total dollar amount. Now imagine one of the stocks goes down by half (e.g the $50 stock goes to $25). Do they have to buy or sell any shares in order to meet their requirements? No, the percentage of the total market cap they have in each company was unaffected by the fall in price. Clark

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