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Strategies & Market Trends : Waiting for the big Kahuna
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To: Spots who wrote (12922)1/10/1998 12:16:00 PM
From: James F. Hopkins  Read Replies (1) of 94695
 
Spots; RE > The point of the term is that the higher priced issues
affect the index more by the same percentage moves than
the lower priced issues do. If IBM goes from 100 to 110
(a 10% move) that moves the DJIA 2 1/2 times as much as
if UK goes from 40 to 44 (another 10% move). Again,
THIS IS NOT MY TERM. I'm only reporting here, not making
it up.
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Well the TERM is importeant if we are to understand one another
other than that it's a play on words. Owing the same amount
of shares of each stock, regadless of price is based on the
amout of issues in that index, and not based on the price of
them..All I can say is a lot of people use Terms out of
Context..and MaCmillian seems to be one of them.
IF you weight "based" on price it's price weighted.
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Now what your saying above is generally correct, as to the
way the higher priced stock will cause the "index" to react
for a "percentage" move in price, but look father still.
IBM is like almost 20 times the size of UK..so that 10%
more don't even come close to what is really happening.
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As far as price weighting goes if it's not "based" in price
I won't call it price weighting if the whole world wants to
be wrong let them. But I'm not alone in saying the Dow is
NOT truly weighted at all..it's based on the amount of
issues. I don't have the time to look it up, I understood
it from the get go. People can call it what they want,
to me it's not truly weighted at all.
Unless you call " x number of issues = x number of shares each"
"weighting"..I don't, and I don't mean to sound
like I'm arrogant but I consider that next to being
brain dead.
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Let me tell you I'v scaned hundreds of books on the market,
damm few of them I get into..generally I see so many mistakes and
hype most of them turn me off real early.
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Gezz you should see just how BAD most of the BIG NAME,
broker analcyst have really called stocks. Look at their
family of funds ! track their up/down grades over six months
holy crap it's enough to make anyone
with a brain feel sick. Seems the bigger the name the bigger the
hype they can get away with.
Jim

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