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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Robert Rose who wrote (2882)	2/10/2001 8:36:51 PM
From: Biomaven	Respond to of 52153

Equally weighted on stock price or what? My preference would be for each stock to get the same initial dollar investment, so a small stock gets the same weighting as AMGN. Weighting by stock price makes no sense to me, although of course this is the way the DOW does it (they adjust only the total divisor when a stock splits, so a split in a single stock effectively reduces the weighting of that stock in the index). Equal weighting only makes sense when (as here) there has been some pre-selection of the components. It wouldn't have made sense in the old Nasdaq index because that one had a bunch of tiny stocks. Most indexes are cap weighted, which means they are dominated by a handful of the biggest stocks. The Value Line has an equally-weighted index as well as a geometrically-weighted one (multiply the prices of the n constituent stocks together and take the nth root). Peter