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August 18, 2005
Not your father's Dow, Thurs., August 18, 2005, 5:27 PM
It used to be that the Dow 30 index was big enough to fairly represent hour-to-hour trading performance across the NYSE. But if you look at the NYSE Composite index vs the Dow 30, you'll see that the Bulls are trying to use the Dow to make trading appear stronger than (i.e., not as weak as) it really is.
The Dow 30 today is not your father's Dow. It may be that the public will have to use the NYSE Composite as the new measure of trading performance on the NYSE.
Although it's a different issue, it makes sense to me for the media to use only two indexes of U.S. market trading, which would be the Composite index of the NYSE and Nasdaq.
The S&P 500 and the Dow 30, as you know, represent only U.S.-based companies, which would be a fair measure of comparing U.S. performance to share trading in other countries/regions, except that the corporations that make up these two U.S. indexes are mostly international operators. Most of the Dow 30 components are really global operators today.
I think it would make sense for Dow and/or S&P to develop a new index comprised of shares of corporations whose revenues are say 90 pct or more derived from the U.S.
Posted by Posted by Bill Cara on August 18, 2005 05:27:31 PM | Category: U.S. Dow 30
Hi Bill - We corresponded a few months ago on how traders try to "psyche out" those positioned based on sound fundamentals. You highlighted it in your blog and for that I'm grateful.
I wanted to ask your opinion on Biovail. Much-maligned and under regulatory clouds both in the US and Canada, I'm sure you have heard the rumbling about Mr. Melnyk looking to take it private. This could have positive implications for the stock. It looks relatively cheap, too, but there is a lot of noise around this stock, and it's hard for us to read Melnyk. The management said there are no allegations (yet) of anything illegal or improper. Any thoughts ? Thanks again and keep up the excellent work.
Posted by: Patrick at August 19, 2005 6:48 AM [link]