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Strategies & Market Trends : Waiting for the big Kahuna

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To: William H Huebl who wrote (22351)	7/26/1998 9:23:00 AM
From: HairBall	Read Replies (1) of 94695

William: The Dow Indices or based on price. Where the stock with the highest price carries the most weight and the reverse is true for the lowest price. All prices are added up and a divisor is used to maintain the formula. Over the years compensating for rotating stocks in and out of the indices and splits, etc., I believe the divisor is down from the perceived whole number of 30 to the actual fraction of .24something for the Dow Industrials these days. Other indices such as the S&P 500 and NASDQ or based on market capitalization. Again, a formula is used to keep the index level. Seems like the newer indices are a more level way of creating an index. However, they too have problems, for instance, five stocks in the NASDQ make up approximately 28% of the market capitalization. Regards, LG PS: Just barked these numbers off the top of my head, may be a little off.

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