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My point was that, as the Nasdaq stocks have gained market cap, they
have come to have a much greater influence on the S&P. The S&P is cap
weighted and big growth stocks automatically exert more influence. Not
so with the Dow. The more that happens, the less the Dow will correlate
with the S&P unless they change the Dow components.
Below are the top 50 stocks in the S&P as of 12/31. Lots of big Nasdaq
names in there - 3 of the top 5 - not to mention the NYSE techs that are
near the top. I think about 35% of the S&P is tech now. That was not the
case when the Dow and S&P were more highly correlated. If this tech
thing turns out to not be a bubble, I wouldn't be surprised to see the
S&P be 50-70% tech in a few years. Only time will tell if it's a bubble
or a revolution. Greenspan's right about that one.
Symbol Percent of the S&P 500
MSFT 4.04
GE 3.71
CSCO 2.52
WMT 2.23
INTC 2.2
LU 1.95
XON 1.67
IBM 1.62
MRK 1.6
C 1.58
T 1.55
SBC 1.54
KO 1.44
AOL 1.4
AIG 1.39
WCOM 1.35
BMY 1.26
PG 1.25
PFE 1.22
JNJ 1.21
RD 1.08
HD 1.02
DELL 0.95
SUNW 0.89
BAC 0.88
BEL 0.85
NT 0.85
ORCL 0.85
HWP 0.84
BLS 0.76
EMC 0.74
MOB 0.71
TWX 0.69
LLY 0.68
WLA 0.67
WFC 0.67
TXN 0.66
SGP 0.65
GTE 0.62
MWD 0.6
MOT 0.6
AXP 0.59
AHP 0.59
FNM 0.59
TYC 0.58
CMB 0.56
MO 0.55
DD 0.54
F 0.53
MCD 0.53
--
Dennis
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