Jim, & all; An up date to the Dow index price vs cap weighted.
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Sample as of DEC 10th 98
DOW is price weihted, the S&P500 , 100 & Naz and Naz 100 MV
Weightings price vs market value of the DOW 30
STOCK PRICE% CAP %
GE 4.13% 12.49% *
MRK 7.24% 7.52% *
XON 3.34% 7.75%
WMT 3.47% 7.36%
KO 3.13% 7.04%
IBM 7.67% 6.58% *
MO 2.49% 5.51%
T 3.06% 5.39%
PG 3.96% 4.80%
C 2.21% 4.70%
JNJ 3.63% 4.59%
HWP 3.02% 2.85%
DIS 1.46% 2.86%
DD 2.50% 2.58%
CHV 3.76% 2.39%
MCD 3.27% 1.98%
GM 3.16% 1.95%
AXP 4.43% 1.90%
BA 1.57% 1.47%
MMM 3.55% 1.29%
ALD 2.00% 1.03%
UTX 4.81% 1.03% *
EK 3.34% 1.01%
JPM 4.86% 0.77% *
CAT 2.22% 0.73%
S 1.88% 0.69%
AA 3.40% 0.58%
IP 1.95% 0.55%
GT 2.56% 0.37%
UK 1.92% 0.24%
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The weighting on the left is the percentage of cash you put
in at this time to track the DOW.
Note how in the Dow , "price weighted"
MRK , IBM , UTX, & JPM all have more MONEY
invested in them as a percentage of the index, than
even GE who has the lagest market value.
so if you were set to tracking the DOW like some funds
are, the asset allocation is far different than if you
were tracking the same stocks, but weighted as if they were
in the S&P.
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A foot note:
IF MSFT were in the DOW because of it's price
it would have about the same weighting as MRK,
But if it were there and Cap weighted it would exceed
the % GE has cap weighted to about 15%,
Well in the derivative market the reality is that it does,
As it's got top place in the S&P, the S&P100, The NAZ, and
The NAZ 100, which far exceeds the strategic value of it being
in the DOW, and now I also know why MSFT refuses to move to the NYSE
it's stock price would lose the strategic value of being the top
arbitrage traded stock in two well traded derivative markets.
Don't worry the top insiders at MSFT are well aware
of this and it's effects, as they sell off hunks of the company.
MSFT has the market by the balls, it is now the lagest Market Cap
stock in the world.
Try to kill her now and we will wind up in a damm mess,
bigger than most people have thought of.
The effects of Indexes are a lot more complicated than I know
how to explain in any short simple fashion.
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Jim
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