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Technology Stocks : IBM -- Ignore unavailable to you. Want to Upgrade?

To: Robert Scott Diver who wrote (7563)	4/2/2002 10:20:24 AM
From: Michael Bakunin	Read Replies (1) \| Respond to of 8218

RSD - Let's measure it. There are a variety of ways to quantify the statement, "IBM moves according to the overall direction of the market." I'll try the correlation of daily % moves. You can get daily closes back to '62 (!) on these from Yahoo; see table.finance.yahoo.com and table.finance.yahoo.com^spc then "download spreadsheet format." I get a coefficient of 0.62, hardly the 99% correlation of near-identical stock indexes, but I think it makes the statement defensible. Put another way, in over 10,000 observations, IBM closed the same way (up/down/unch) as the S&P nearly three of every four trading days. -mb

To: Robert Scott Diver who wrote (7563)	4/2/2002 6:33:13 PM
From: Scott Bergquist	Read Replies (1) \| Respond to of 8218

RSD, just to amplify what I am trying to say, it is that stocks such as MSFT, GE, IBM, INTC...Dow stocks, top five OEX, top ten SPX... they will move down or up =more= in response to "world events" as it were, than their own news. Sure IBM may announce 10% more service contracts are forecast, but if Israel invades Syria, and the market drops, IBM will go along, because that news is bigger than company-specific news. Or Greenspan makes an announcement, and IBM says they have an accounting scandal, the announcement gets overlooked. An equity such as PeopleSoft may actually be travelling up while the market is falling, but its own news, when significant, will produce a percentage drop you would =never= see with IBM. Stocks such as IBM which are large components of indexes ( and "most stocks" are obviously not) tend to trade in complicated hedges by large houses (MLCO, GSCO). Has the market followed EMC the last 24 months, and has EMC been pretty much like the DJIA?? This is what I am trying to say: For large influential stocks, they "follow the market" because, essentially they =are= the market. If they don't create the news (e.g. Intel warns) then they go along with the news (Enron accounting). In that context, I view Winnebago saving $150k not worth mentioning. I've seen more millions saved at BAC, and it made =zilch= stock price difference.