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To: Follies who wrote (2932)	12/27/1998 7:00:00 PM
From: jjs_ynot	Respond to of 99985

That was my take also. You have to account for the fact that the portfolio value changes along with the index constituents. If one has to reinvest the next day; then the new weighting comes into play. However, stock issuance, share buybacks, mergers, option programs convertible shares, exercise of warrants and many other thing effect the weighting so that one has to effectively re-weight frequently in any case.

To: Follies who wrote (2932)	12/27/1998 8:18:00 PM
From: James F. Hopkins	Read Replies (2) \| Respond to of 99985

Dale ; I see what you mean , and its a lot simpler that way, my model didn't even calculate the total shares outstanding, but yes if you had 1% of everything you would go right with the index and not have to swap when the weight changed on one or the other. Just when they got kicked out or brought in or issued more shares..doing a buy out ect. ------------------- The last part RE > If you use that adjusted amount, you would see you have to buy the same amount of shares of each company. I'm kinda thinking you meant to say the same percentage amount of out standing shares..? as I can see your smart enough to know the same amount of shares wouldn't get it, unless they all had the same amount outstanding. It's a lot simpler than the program I'm running, now I'll have to change mine. :-( --------------------- Yet with the DOW you do wind up with the same amount of shares in each, no matter how many they have outstanding. ---------------- So with the S&P it's better said that you own a certain set percentage of each companies shares. And that automatically makes you cap weighted, as the big caps will have more shares outstanding, and I think that's what you were saying all along, and if you keep that set percentage you don't have to re-allocate to track her..unless they or a company makes some changes. Even splits wouldn't effect your weighting. All that price/vs market cap vs weight change I was doing was not called for. I'm glad you had the patience to keep after me on it, it makes it much simpler for me. And explains it better than I could. Jim PS still with this, NEW money coming into the market via indexers will be buying more of the BIG caps share & dollar wise and so the Big size still attracts more and more money. At some point if people want out of index funds this could be hell on the market. Jim