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Technology Stocks : PSFT - Fiscal 1998 - Discussion for the next year -- Ignore unavailable to you. Want to Upgrade?

To: Melissa McAuliffe who wrote (2305)	10/1/1998 1:37:00 PM
From: Lutz Moeller	Respond to of 4509

Melissa, somwhere else I read, the index funds do not have to mechanically mirror the indexes. They have some degree of freedom. At last You'll find the binding details in each index funds prospectus, as that's the basic contract between customer and fund. But I have not looked into the details of, say Vanguard S&P 500 index fund. Anyhow the rise upon inclusion in the index is fairly obvious for PSFT, less so fo SEBL today! Lutz

To: Melissa McAuliffe who wrote (2305)	10/1/1998 2:02:00 PM
From: GJD	Respond to of 4509

PSFT will be added to S&P 500 at the end of the day, thus any index funds will have to buy it by today or tomorrow. In case of SEBL it was added to the S&P400 by the close of Tuesday and it was strong yesterday also, despite the market. From here on ,though the earnings news will dominate. Lehman brothers has 2 excellent reports on ERP software stocks on their site. Overall positive on larger ERPs like PSFT.

To: Melissa McAuliffe who wrote (2305)	10/1/1998 2:46:00 PM
From: LLCoolG	Read Replies (1) \| Respond to of 4509

Melissa, Adding PSFT ot the S&P 500 will initially drive the stock price up, but it is mainly due to the arbitrage players trying to skim some profits. This event is very good for PSFT provided that the S&P goes up. PSFT does not always follow the general market, but this inclusion will cause it to follow the general market much more closely. So if you believe that the S&P goes up from here, PSFT will benefit. But during corrections, PSFT will also go down. IMO, while it is not a terrible thing, it takes away from PSFT's previous strength--momentum play. Its strength was that it was not a hugely known company, and investors benefitted greatly from that. Continual earnings surprises and the growth rate drove speculation up, and the relative anonymity and independence from moving with the market led to larger short squeezes and continual upward movement. Now it will act more like any other stock, although many S&P stocks still benefit from momentum. This inclusion makes it a more fundamental play, probably to the delight of many people here. Regards, G

To: Melissa McAuliffe who wrote (2305)	10/1/1998 3:23:00 PM
From: Marq Spencer	Read Replies (1) \| Respond to of 4509

Melissa, As Lutz said, each index mutual fund has its own rules defined in the prospectus. Some have to follow the index closely, others do not. Even those that do follow the indexes, have some flexibility in assigning weights to their portfolio, and differing policies re. time-frame to adjust those weights. For example, if they need to have 2% of their capital in XYZ, and currently they have only 1.5%, they may take their own sweet time to increase it to 2%. So, the short answer is "Depends." <g> But adding the stock to the S&P500 can only be positive for the company due to increased demand from index funds. - Brian.