agip, isn't the S&P price weighted?
agip, isn't the S&P price weighted?
Econ,
Got it, but today Apple was a big negative for the Dow and NASDAQ. Apple and Kohl's were the negative news of the day, countered by energy and yield.
Igy
The Dow was up today.
Econ 101 wrote:
agip, isn't the S&P price weighted?
no. The Dow is price weighted.
The SP500 is market cap weighted.
Econ,
Dow is a dollar weighted index, S&P and NASDAQ market cap weighted. The point was the influence on the market and not about absolute numbers. Furthermore, Apple stock like their products has a cult like following.
Igy
this thread is a powerhouse.
2.71 years and we've averaged 11.8 posts per day.
We'll catch the Mike Rossi thread at some point in the future.
#squadgoals
Good thing the "boycott Igy" never took off.
SHAK a shaking....
Ghost of Igloi wrote:
SHAK a shaking....
I bailed out of that one a while ago, at a 10% loss or so.
Hey I lost more on WorldCom.
Why do you say Apple negatively affected the NASDAQ and Dow (which was up), but not the S&P?
agip, ok but market cap is a function of price, right?
Econ,
It affected them all and perhaps will continue to do so. This article was just posted to CNBC, so it is far from just an Igy opinion.
http://www.cnbc.com/2016/05/12/apple-just-sent-up-another-red-flag-for-stocks.html
It all seems pretty obvious to me.
Igy
Econ,
Yes.
Market cap = total shares publicly traded x share price.
By the way, I just saw an aftermarket trade on Apple at $83.88.
Igy
Econ 101 wrote:
agip, ok but market cap is a function of price, right?
you don't need me for this.
market cap = share price x shares outstanding.
you can have a small cap stock at $10 with only 100,000 shares. = $1 million market cap
or you can have a megacap stock at $10 with 50,000,000 shares = $500 million market cap.
Price of the shares isn't very important in market cap weighted indices.
The Dow is different - the two companies I example above would have exactly the same weight in the Dow. Which is absurd, but that's how they do it.
Thanks for the education, guys.
Do the math wrote:
Ghost of Igloi wrote:John,
Have you watched the market action for the S&P and Apple stock? Apple is currently down 2% and pulling the market down with it. That was my point from yesterday.
Igy
Not really. The S&P is down less than 0.4% as I write this. That's less than a half cent on the dollar. With Apple down over 2%, that means the rest of the market is up on average.
Ghost of Igloi wrote:
Math,
Yes really. Second largest index component + largest percentage down = largest influence on index performance.
Igy
You were at first wrong that it pulled down the market, but then correct that it dragged down the index after I highlighted your error. Props for admitting your mistake.
agip wrote:
Do the math wrote:With Apple down over 2%, that means the rest of the market is up on average.
no it doesn't.
For a quick estimate of this kind of thing, compare SPY and RSP.
SPY is market cap weighted and RSP is equal weighted. Both own the same 500 stocks.
it's not exact since these are ETFs and don't trade exactly on NAV, but close enough.
We are comparing market caps here. If Apple's is down 2-3% while the overall index is only down a fraction of that, then the average market cap of the rest of the market must be in positive territory. It's really that simple.
Math,
Yes, you are correct, and tonight Apple is dragging down the international index but not the international market.
Igy
Econ,
Glad to help.
Last year a large part of the positive return of the S&P 500 came from a handful of stocks. If I recall correctly MCD, HD, JNJ, FB, AMZN, NFLX, and GOOG. Last week I posted one year equity returns as of April and there was about a 5% spread between the market and equal weight S&P.
Igy
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