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Strategies & Market Trends : Nasdaq 100 Analysis

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To: Zeev Hed who wrote (3)	11/18/2001 8:54:23 AM
From: Steve Lee	Read Replies (1) of 238

It seems it only gets manually reweighted once a year, and then I think it is by market cap at the time. Around the end of last year, AMAT's market cap was less than either IMNX or MXIM (I believe). The weighting changes slightly on a daily basis (maybe intraday?) due to changes in the stock prices but it doesnt seem to be a predictable change according to stock action. There is a reshuffle soon, at which point I am going to have a go at calculating "real" earnings to compare the real PE, with the pro forma PE. I think QQQ holders get screwed when the NDX 100 is reweighted. Because the reweighting is by market cap, the real dogs get to devalue the NDX on the way down, but when they get taken out, their weighting is so insignificant that it gives the index no benefit, instead getting replaced by some other stock that has a large market cap, and by implication has already done a substantial amount of the appreciation outside of the index. It is kind of like an index always composed of last year's winners. And of course, QQQ holders also get screwed cos the fund managers have to bid up the new entrants, and get "nothing" for those leaving.

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