Double Bubble Trouble

Doug Henwood dhenwood at
Sun Nov 7 06:46:23 PST 1999

Rob Schaap wrote:

>And does it matter that MS cops an adverse judgement e coupla days after it
>gains entry to the Dow Jones? I mean, big waddage like MS, if it takes a
>stock-hit in the morning, would affect the Dow meaningfully, no?

The Dow is computed by adding up the prices of its 30 components and dividing by a divisor that DJ publishes, and which changes with changes in the components to maintain comparability over time. That divisor is now 0.19740463, so every one point change in Microsoft should result in a 5.0657373133 point change in the DJIA. In after-hours trading on Friday, MSFT was off only about 5 points, but after-hours trading is very thin. I can already hear people saying, "Oh but the AT&T breakup was very bullish, so buy buy buy!"


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