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Non-Tech : The Critical Investing Workshop

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To: bonnuss_in_austin who wrote (26600)	7/25/2000 9:16:22 PM
From: Sully-	Read Replies (1) of 35685

bia, JDSU's departure will affect the entire S&P 500 per Pisani. JDSU's market cap is displacing a tiny one, so the whole index will need rebalanced somewhat significantly. RAD's market cap was tiny, thus a small S&P weighting & no apples to apples swap. I'm terrible at timing a stock for a day trade. I think that Pisani showed the potential for a JDSU sell off tomorrow, but he hedged it a little. Keep in mind he said that 158 million shares were bought since the announcement of JDSU inclusion into the S&P. He said the run up after the announcement obviously included a considerable number of folks buying with the intention of selling to the index funds tomorrow. He also worked in the double counting issue (hedge), so potentially that could make it 80 million shares or so (probably more like 100 - 120 mil). Keep in mind that some folks bought during that period & intend to hold for the long run. I'm sure there was a lot of buy/write folks too as call premiums were enticing - they will hold the underlying..... for now. The index funds must buy 53 million shares of JDSU. How many folks will be speculating it will go up & buy some tomorrow? (look at BRCM the day it went in - FWIW, I believe Pisani said their might be too many folks looking to sell BRCM to the funds - it sold off right after that report but it ended the day up big if I recall correctly) How many will short speculating there is an oversupply based on Pisani's report? Now factor in that there should be a lot of selling pressure on the S&P 500 IF they must rebalance their entire portfolio tomorrow too. Will that cause speculators to short the S&P 500? Will that affect JDSU too? Now my brain hurts. I think too much to be good at day trades :-( oof Tim

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