Spots; Price Weighting..is if you take the Index total,
and divide the price of each issue at the time into that
total index..you allocate that number of shares to that issue.
In effect PRICE weighting says you have exactly the same
amount of "dollors" in each issue, regardless of the price
of that issue. You invest just as much $ in UK as you do in
GE..that's price weighting..( I don't recomend it ) but I
also would not recomend bying the same amount of shares of
each stock regardless of the price ( that's really not weighting
at all ).
Still it's market cap weighting that tells the most at a glance
as it represents both price & shares out standing, and reflets
more of what the majority of the public is really doing.
With this it's kinda inverted ( you own more shares of
the MEGA caps than you do the thinly traded ones, regardless
of price. and belive me it's the Mega caps that trade on an
average much more volume than the Med caps...even here there
is plenty of room for error..but it's a huge improvement over
just wathing the DOW bug and taking that as an indicator of
what the market is doing. Doing that is next to being brain
dead.
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I need to improve my indexes..but it takes time. I need to be
able to get the data on all of them at one time
in spreed sheet format, and feed into excell..
Then the spead sheet needs to total the losers, and winners
into seperate groups..with their actual volume x price change.
hmmm..I could do that with out seperating them. just do
volume x price change in and out side colum, then total
the results..the result would show clearly if money went in
or out and how much.
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This gets around days when market says more lossers than winners,
or the other way around, but fails to say that the MORE was
really less in Dollors..or the Less was more..
We need to see the actual money flow..and compare it
percetage wise to the index change,
while knowing if the flow in is up several days but the index down,
because of an anomally in some lesser traded issues, well then
we have a leading indictor..making it into a leading indicator
by noticing the divergance between it and what is "actully"
happening..is the thing that can give you an edge, and let you
get in front of the curve..or at least close to the real curve,
of the market, which at best the DOW is trailing from one or
two days, to several weeks.
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I'm not just into saying the DOW is missleading, I'm saying it can
be used ( but not on it's lonesome ). And I bet some people are
onto this and not talking about it either.
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I want to create a leading indicator, using the DOW as it is,
but aginst itself, by finding or catching sizeable anomolies, before the index catches up with herself, this for the sake of market
timing. Which some will argue can't be done..but I'v come real
close and I'm getting better at it, so I'm not going
to pay thoes brain deads any mind.
Market timing That's what this is all about, how and when to jump
in a "basket"..or index and exit vs all the fuss of picking
individul stocks, how and when to buy and sell the S&P in such
a way as to beat it. Something 85% or more of the mutual fund
managers can't do. And most individual stock pickers generally do
worse than the funds..they may say they don't but I got data from two
brokerage firms that shows it. Funds have an edge, only hot shot
day traders ( and they better be good on paper before they start,
& many get into that and go broke ) Most can learn to trade on paper good, but often lose when they go to real money.
Market Timing that's the name of the game.
Jim
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Ps
Also This is handy for going in and out of No Load mutuall funds
"they don't like it" but the way I go in and out they don't know
I'm timming them, as I go in with a basket of others via my broker..
I also track over 35 No loads..divided into sectors and market
cap. I'm a little new at it but I'v road OAKSX up twice and missed
most of it's down side. ( it's closed to new investors so I always
maintain at least one share ) by market timing just getting
half way close you can beat the funds by using them.
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And I'v filtered through enough hype on SI in the last two years
to know 85% of the hot individual stock pickers have not done
so hot. I go back and find old ( you gota buy this posts ) and
then look at the results. I also look at all the "what happened to
so and so "..crap with the earnings reports and sudden bad news
that dumps a stock..I got paper portfolios running up my
ying yang..and some of them have really convinced me the
average joe cannot afford to buy a spread of stocks wide enough
to protect himself aginst a big dumper. And one big dumper in
ten can not only kill the portfolio it can take a lot of time
to make up. I'm in one stock right now, and when I get lose
of it, it will be baskets from here out..with maybe a short or
two..but only if I'm covered with a call. Not a stop loss.
Baskets can be had many ways, NO Loads..WEBs, and the indexes,
can each give you a basket, "SPY" is an example..trade it and trade
it well and you will beat the S&P "if you can just market time."
and with them your risk is greatly reduced. |
