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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: James F. Hopkins who wrote (2890)	12/26/1998 9:25:00 PM
From: HairBall	Read Replies (1) \| Respond to of 99985

James: Speaking of Index Funds...I think I have a simple translation of what you are saying regarding how the weighting causes Index investors/funds to chase the highest weighted stocks in an Index. Here goes...<g> A single long investment made at one time and allocated per the stock weighting of an Index will for the most part stay current with the weighting changes of that Index. (Assuming the monies are left long and the stocks in the Index remain the same.) However, where your point comes into to play is when new monies are invested. The front runners will always require a larger percentage of the funds, thus creating a supply demand scenario that continues to drive the highest weighted stocks in the Index. As Index funds are constantly investing monies, they are constantly driving the highest weighted stocks. However, if a true Bear raises its head, the reverse will happen. Something to keep in mind. Also, if a front runners falls out of favor and its price begins to drop it can cause an over reaction as Index Funds reallocate. Regards, LG

To: James F. Hopkins who wrote (2890)	12/26/1998 10:15:00 PM
From: jjs_ynot	Read Replies (1) \| Respond to of 99985

What does the second portfolio look like if the second portfolio reduces in value to match the original minus $123.081045 to account for the reduction in portfolio value to reflect the loss in 12.3081045 shares of $10.