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Technology Stocks : JDS Uniphase (JDSU)

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To: Rob S. who wrote (11691)	7/21/2000 5:01:18 PM
From: Alastair McIntosh	Read Replies (3) of 24042

Rob, according to the article referenced earlier, thestreet.com index funds must buy at the close on the day the stock is added to the index. From the article: When stocks are added to the S&P 500, they almost always move sharply higher as the date of actual addition to the index approaches. It has been happening for more than a dozen years, and it's all because of the seemingly crazy way indexers invest and trade. Here's why it works: Indexers have no choice but to do with real money exactly what the index does with pretend money, and at exactly the same time. That applies to Vanguard, Barclays Global Investors(where I used to run portfolio management and trading), State Street, and all the other money managers and pension-plan sponsors who run index funds. They're all good little soldiers: when the order is given, they carry it out without question. Let's say the S&P Index Committee orders that JDS Uniphase (JDSU:Nasdaq - news) is joining the index at the close on July 31. That means that a trillion dollars worth of index funds are buying JDS Uniphase at the close on July 31, no questions asked -- and price is no object.

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