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Strategies & Market Trends : The Rational Analyst

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To: HeyRainier who wrote (784)	4/24/1998 6:01:00 PM
From: FJV	Read Replies (1) of 1720

[S&P LISTING] Hi Rainier, It is logical that a new listing on the S&P 500 would be initially beneficial for a stock due to all of the interest exhibited by index fund managers. Wouldn't it also stand to reason that since the float would be more institutionally biased, that the same stock would be more vulnerable in a severe correction than prior to having been listed? Increased exposure to index funds would tend to accelerate and exaggerate movements to both the up and down side due to heavier program related and block trading activity. If one believes, therefor, that a down draft is imminent, the S&P listing, while prestigious and an advantage over the long term, creates additional S/T downside risk IMO. Your thoughts. TIA

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