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When a exchange / brokerage creates a index, they look at the stability of
the company. It has to have a audited financial / be in business for a while
etc. Most of the companies do not disappear all of a sudden. The bix/ sox /
fpp companies have been around for a while. Even the new indexes dot / gsti
/ inx are composed of sound companies.
The only way to invest / trade these indexes is the Fidelity select funds
(cash basis) or using the Options on the CBOE. The fidelity selects do not
own the index components, but are representative / very similiar to them.
I dont think , any of the indexes trade as a future. Someone can correct me,
if i am wrong.
Mike
> If you buy index and one company in the index disappears (let say into
> bankruptcy) the index will substitute the company by a new one, but if you
> bought the individual companies of that index, your money in bankrupt
> company are gone (mostly). To get back to index equivalent you have to
> shell out new money for the company that in now a new member of the index.
>
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