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

To: James F. Hopkins who wrote (2927)	12/27/1998 6:06:00 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 99985

Jim, as you analyze the SPX take read this cbs.marketwatch.com If I would need to invest in something and not active in the stock market I would go for the SPX funds. Best performance over 3 years with relative little volatility. Big funds are just index funds in disguise, The fact is most large funds do tend to a middle ground -- they become pseudo-index funds. Here, the portfolios of each are diversified across about 500 funds. And their one year returns are close at about 22.6%, while Vanguard wins on a three-year return basis. Of course there are some big differences in other areas: - Management: Vanguard is passive, Magellan actively managed - Loads: Vanguard is a no-load, Fidelity charges a front-end of 3% - Expenses: Only 0.19% for Vanguard, Magellan is 0.61% - Turnover: Vanguard is only 5%, with 34% for Magellan Fund In the past, loyal investors tended to forgive Magellan for these little indulgences. However, this appears to be changing as new money is pouring into Vanguard's S&P 500 index funds at a faster rate in recent years: BWDIK HAim

To: James F. Hopkins who wrote (2927)	12/27/1998 11:11:00 PM
From: Moominoid	Read Replies (1) \| Respond to of 99985

meaning you take the market cap of a stock / the total market cap of all stocks in the index and get a weight, or it's percentage of the total market cap. Then you allocate your Dollars invested among the stocks by the percentage given, just how many shares you wind up with depends on what you $invest * the %of its cap / price of the stock. Big caps get more weight and move the index more any time they change price. Yes but this still doesn't tell me how the index is constructed unless it is just the total market cap relative to a base period. For example the Tornquist-Theil index is given by the following formula: Dln(It) = 0.5 * sum i{(St + St-1) * Dln(Pit)} where D is the first difference of the variable, ln is natural logarithms, i is the index for the different stocks, t is the time period, P is the prices of the stocks and S is their market cap weight in this case or the share of whatever in other cases. The quantity index can be derived by then dividing the total market cap in each period by the price index I. This is now a pretty standard economist's index. But I wonder if the SP500 is anything liek this or just total market cap relative to the base period. David