Stock Attack -- A Complete Analysis Message Board

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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: Paul Shread who wrote (32121)	10/5/2000 8:13:52 PM
From: Terry Whitman	Read Replies (2) of 42787

The Dow 30 is a price weighted index. A $100 stock carries 4X the weight of a $25 one. Hence an inherent positive bias. It's alot like reverse hedonic adjustments in CPI. <g> For example- A $100 stock goes up 5% ($5), while a $25 stock loses 20% ($5). The net effect to the DJI Average is ZERO. The stocks that go up keep gaining larger weightings, and the ones that go down get smaller ones. Looks like GE, IBM, 3M and XOM are holding it up. quote.yahoo.com@^dji The Dow can only crash if the high$ stocks in it crash. Many of the low$ ones have been hit already. If they continue to get hit, it weighs less and less on the Average. Make sense?

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