Insanity!
Apple (AAPL) is 20% of the Nasdaq 100
Tuesday, June 22, 2010 at 03:42PM
With shares of Apple (AAPL) rallying even as the overall market remains
weak, the stock's weighting in the NASDAQ 100 is beginning to make a
mockery of the index. Believe it or not, AAPL now has a 20% weighting
in the index. No, not even AAPL has rallied so much that its market cap
actually accounts for 20% of the NASDAQ 100's market cap (although it
does currently have the highest market cap in the index). The reason
for the large weighting dates back to the creation of the index when the
market cap of Microsoft (MSFT) dwarfed the rest of the stocks listed on
the NASDAQ. Back then, in order to avoid making the NASDAQ 100 an index
dominated by MSFT, they had to arbitrarily lower MSFT's weighting and
raise the weighting of the rest of the stocks in the index.
Today, the NASDAQ 100 is increasingly becoming an index of Apple (AAPL).
At current levels, AAPL's weight in the index equals the combined weight
of MSFT, GOOG, QCOM, ORCL, CSCO, and INTC! Given that MSFT's weight was
once adjusted so that it didn't dominate the entire index, some would
say that it's time for the NASDAQ to adjust the weightings again so that
AAPL doesn't dominate the index now. However, according to NASDAQ's
methodology for the index, AAPL's weighting in the index won't be up for
review until its weight reaches 24% of the index or more. |
