Posts filed under “Index/ETFs”
Nasdaq OMX is rebalancing the Nasdaq-100 index (QQQs), which currently has one company — Apple (AAPL) as more than 20% of the index.
The WSJ notes “Apple’s market capitalization is roughly $300 billion, twice that of Google. But its weighting in the index was five times that of Google. After the rebalancing, Google’s share of the index will be 5.8% compared to Apple’s 12.3%. Apple will remain the largest component of the index.”
No one should be surprised at this — it is long overdue. If I were running this, I would place a cap on the size any single stock can be in the index at 10%. Rebalance quarterly when it exceeds that level; monthly if it is exceeds it by 3%.
Beyond that, it is simply imprudent for any index to be a proxy for a single stock. The point of indexes is a broad based representation of a given sector or industry.
Apple has risen 4-fold over the past 2 years. Quite bluntly, it is surprising the OMX has waited this long . . .
courtesy of WSJ
I normally NEVER care about PR releases — they are rarely on topic, and mostly worthless — but this run of Dow Jones data was surprisingly relevant to the end of Q1: Dow Jones Industrial Average Long term data · Highest intraday level (12419.71 at 12:08:49 on 4.1.11) since June 6, 2008. · Down 1787.81…Read More
As of late, I have been intrigued by Japan. It is a part of the world that investors seem to detest ignore, despite signs of technical improvement. I’ve talked about this in the office, and with some of our clients who either own specific Japanese names — or live there. The thought process is Japan…Read More
My pal David Rosenberg points out that the Value Line Arithmetic Composite Index is at an ALL TIME HIGH. (This is an equal weighted price index of the 1650 stocks surveyed by Value Line, averaged daily). Dave writes: “The average stock, by the way, according to the Arithmetic Value line index, just hit a new…Read More
Quick: What do great symphonies, great novels, financial markets, and the conversations of clients and therapists have in common? Answer: All follow distinctive themes. Much of the meaning that we find from all of them lies in our ability to track these themes across their many shifts and permutations. A composer or novelist brings themes…Read More
Its been a tough year for the U Penn prof. First, the market has gotten cut nearly in half, something many buy & hold investors admit is possible, but is supposed to a rare occurrence. But as we have seen in 2008, and 2001-03, and 1972-73, these sorts of brutal bear markets are a lot…Read More
> I am especially pleased to present today’s Think Tank piece by James Bianco. Jim has run Bianco Research out of Chicago since November 1990. He has been producing fixed income commentaries with a circulation of hundreds of portfolio managers and traders. Jim’s commentaries have a special emphasis on: money flow characteristics of primary dealers,…Read More
Kevin Lane is one of the founding partners of Fusion Analytics, and is the firm’s director of Quantitative Research. He is the main architect for developing their proprietary stock selection models and trading algorithms. Mr. Lane is a member of the Market Technicians Association. ~~~ As seen below in the S&P 500 has been capped…Read More
Jack Bogle is having an author event at the Barnes & Noble on Fifth Avenue (555 5th/between 45 & 46), at 6:30PM June 17. He recently published a book called “Enough.” Not sure how people feel about Jack. I like his criticism of Wall Street in general, but given what giant shareholders Vanguard is, I…Read More