Jeffery; We have a new Godzilla in this market that has grown in
size and it is still growing and it's changing the way the market
works. Old patterns can't be used to predict what this thing will
do. More Index funds coming on line all the time.
In a way we are back to the NIFTY FIFTY thing, the 50 top stocks
in the S&P500 make up over 50% of the entire S&P.
The Top 15 in the S&P 100 make up over 50% of it.
The Top 5 in the Nazdaq 100 make up 50% of it.
We have index funds now running out our ears, and more coming
on line as fast as they can set them up.
These funds track the indexes , regardless of the inflow or
out flow of money, hence they computer program buy/sell the
the ones that effect the index the most more than the others.
As it's easier to stay in step if you trade the Nifty Fifty.
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Indexing has for all practical purposes crippled the concept of
value investing. It's more strategic investing now, based mostly
on cash flow than into the mutual funds , vs interest rates.
Pension funds and all have gotten into the swing, looking for
returns they go with the flow.
There is some rotation, but that's mostly among the Nifty Fifty.
At any given time you can down load the top 50 in the S&P,
spilt them into two groups of 25, pick the second group
cull out any thing that's out of favor, then reallocate every
3 months and you will beat the S&P.
The indexing sets up momentum, I call them MOMO funds,
Here is the second 25 of the Nifty Fifty,
Symbol Name Prev Cls Last Trade Change
^SPX S&P 500 INDEX 1158.56 Jul 10 1164.33 +5.77 +0.50%
TRV TRAVELERS GRP 68 3/8 Jul 10 69 +5/8 +0.91%
CCI CITICORP 168 1/2 Jul 10 171 1/2 +3 +1.78%
G GILLETTE CO 59 5/8 Jul 10 62 9/16 +2 15/16 +4.93%
BLS BELLSOUTH CORP 67 Jul 10 66 1/8 -7/8 -1.31%
FNM FANNIE MAE 66 9/16 Jul 10 67 1/16 +1/2 +0.75%
MOB MOBIL CORP 75 1/8 Jul 10 74 13/16 -5/16 -0.42%
AHP AMER HOME PRODS 50 1/16 Jul 10 49 1/2 -9/16 -1.12%
PEP PEPSICO INC 41 5/16 Jul 10 42 5/16 +1 +2.42%
BAC BANKAMERICA CORP 97 7/32 Jul 10 98 11/16 +1 15/32 +1.51%
CMB CHASE MANHATTAN 73 5/8 Jul 10 74 1/2 +7/8 +1.19%
FTU FIRST UNION CORP 63 Jul 10 63 0 0.00%
SGP SCHERING-PLOUGH 98 Jul 10 98 3/8 +3/8 +0.38%
ABT ABBOTT LABS 42 15/16 Jul 10 43 7/8 +15/16 +2.18%
GTE GTE CORP 56 1/8 Jul 10 56 9/16 +7/16 +0.78%
F FORD MOTOR CO 59 Jul 10 57 7/8 -1 1/8 -1.91%
CHV CHEVRON CORP 81 Jul 10 81 7/8 +7/8 +1.08%
DELL DELL COMPUTER 99 7/8 Jul 10 100 13/16 +15/16 +0.94%
WLA WARNER-LAMBERT 73 3/16 Jul 10 74 5/16 +1 1/8 +1.54%
HD HOME DEPOT INC 47 Jul 10 48 1/2 +1 1/2 +3.19%
BA BOEING CO 48 1/16 Jul 10 47 7/8 -3/16 -0.39%
UN UNILEVER NV 75 1/2 Jul 10 76 15/16 +1 7/16 +1.90%
AXP AMER EXPRESS CO 114 5/16 Jul 10 116 13/16 +2 1/2 +2.19%
GM GENERAL MOTORS 71 3/16 Jul 10 71 3/16 0 0.00%
AIT AMERITECH CP 45 11/16 Jul 10 47 1/4 +1 9/16 +3.42%
MWD MS DEAN WITTER 90 11/16 Jul 10 92 3/8 +1 11/16 +1.86%
TWX TIME WARNER 86 11/16 Jul 10 87 +5/16 +0.36%
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Chart them as a group since the first of the year and you
will see the picture.
This will last until a big enough crash comes that indexing
gets hit so hard it goes out of favor, till then nothing will
beat reallocation every three months into the second 25, with
the exception of fad ( high risk ) stocks like the internet
sector if you want to gamble on them.
Jim
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