In case you were wondering why most stocks were green yesterday and $AAPL, $MSFT, $GOOG and $AMZN were down, here's why 👇
The Nasdaq 100 index will be rebalanced to reduce the heavy weighting of the few companies in the index, according to the announcement. In response, stocks of companies like Apple, Microsoft, Amazon and Alphabet have dropped 1-2% as their weight in the index will likely be reduced. The changes will be made on July 24.
Rebalancing usually occurs for several reasons:
- Maintaining the proper representation of companies in the index.
- Limiting the influence of individual firms. No one firm should make up too large a portion of the index.
- Adherence to a predetermined methodology. The indexes have clearly defined rules for selecting and weighting firms that must be followed.¨
- Minimizing costs for investors. Rebalancing allows investors to hold portfolios replicating the index without the need for daily intervention.
Cool thanks for the info :) i hope they keep going down and get to nice numbers for buying ;)
Thanks for the report, this is the first I've heard of this and I didn't know something like this was possible. Yesterday I was wondering what was going on.
I also didn't write about it yesterday but ended up not writing because in the time I've been investing I haven't experienced it yet probably. Anyway in the longer term then, could this mean another drop because of this or was it just yesterday? Because as I've read and you state also, shouldn't it affect the price somehow or the companies themselves? Otherwise thanks for the info. 😉 And I think something along those lines was wanted already, because those indices really don't reflect the value much right now in terms of all companies. Is there any way to do that at all? ... because anyway those companies like Apple etc with huge market caps will be there and the other 90 or so in nasdaq or 490 sp500 won't reach them.