can you imagine where assets would be priced if every layer of manipulation were removed... from the cpi, gdp, job #s, working group, earnings, weightings, monetization, cash back mortgages, etc etc etc etc
It's a cap weighted index! The Dow is price weighted. Do you see any dramatic lack of correlation between those two indices? No, right? So the "weighting" isn't the answer, eh? It's all in the components.........
I spoke with S&P and they said that I have to subscribe to their service to receive the reweighting info for the S&P 500. Does everyone here subscribe or is there another website that offers this free? Thx, Bob
Forget about the index for a minute. Take a regular stock, like AAPL. Consider if it goes down 20%. What if we can "change the components" of AAPL like we could in the SPY. What if we can take out the components of AAPL and replace it with that of IBM. Essentially AAPL now becomes IBM. Considering that IBM is a bellweather, it should not fall anymore as much as AAPL would... If we pull up a chart of AAPL it will look different.
First you ask a question about the S&P 500 index without having the understanding that it is CAP-WEIGHTED ( and not price-weighted ) as Pabst so accurately points out, then you come back to say "Forget about the index for a minute"? Too funny. Another typical ET "conspiracy" post that shows no logic whatsoever.
You need to do your homework. The Quarterly Rebalancing ( and weighting ) is shown on their website, for free in "xls" format. http://www2.standardandpoors.com/spf/pdf/index/031407_Global100-Rebal.pdf
Landis82, thank you for your response. The link you posted is is for the S&P 100 Global Index not the 500. My understanding is that there is a specific list for just the S&P 500.
<i>"It's a cap weighted index! The Dow is price weighted. Do you see any dramatic lack of correlation between those two indices? No, right? So the "weighting" isn't the answer, eh? It's all in the components........."</i> Be that as it may, wouldn't it be nice to see where all indexes would be with year 2000 components, no additions or subtractions whatsoever. Of course that's impossible with delisted companies such as WCOM, Enron, etc but would give a true measure of where "the market" is today versus peak highs seven years ago. Investors who had portfolios loaded with above two former stalwarts, JDSU, CMGI, PDLI, etc infinium take nil solace in the fact that Dow 12,000+ or S&P 1400+ are the current high water marks today. I think that's what the OP actually meant, in a general sense.
Marketcap is just Price x Shares outstanding. Remember when google's marketcap was over XXX billion dollars and everyone had a fit about it? Remember how they "couldn't believe" it at $80. And here it sits at $400 many years later. Whether it's marketcap weighted or price weighted isn't the point. The point is that the components change.