I have been intrigued with the weighting aspect of the Top 40
Index ever since the subject came up a week ago i.e. 27% for TEL ..6.7
for CAH. These two representing a third of the index
weighting.
(Ref "Telecom switches from market darling to deadweight"
Sharechat archives 8/07/2000)
If either under-performs the remaining 38 have to make up the short fall
for the Index to keep it's status-quo. With the recent downturn for
TEL and poor performance from CAH the remainder have to compensate to a
higher degree than otherwise would be the case. It's a bit like a
collection of ants having to carry a larger incumbent animal ( I was
going to say a rat but that may be unkind, perhaps a mouse)
My thought is that the Index can give a misleading overall picture as
many of the 38 may be performing quite well but because of the weightings
the final impression of the Market is poor.
The above article pointed out that in the June quarter without Telecom
the Index gained 9.6% but including Telecom it was just 0.3 %.
The Top 40 Index is the generally accepted yardstick quoted by the media
etc. So one could argue that this apparent misrepresentation would be an
off-putter for potential investors ?? This could be added to the list
presented by Steve. What thoughts ?
A request. Can anyone help me with a top 40 listing showing
total shares issued for each Company.
I tried to set this up myself but didn't seem to get the right figs from
the yearbook. I tried Ord Minnett for a copy of the spreadsheet
they did - no luck - not even a reply !
See IRG research reports
