In a prior screencast we noted the importance of Apple to the Nasdaq 100 and the overall tech economy. Now we are seeing some of the downside from this reliance in the announcement that the Nasdaq 100 index is being rebalanced. This rebalancing will reduce the weighting in Apple by some 8%. One question is how is that a major market index could get so overweighted in any individual security. In short, investors need to look behind an index to understand how it is constructed. The other big question is what is going to happen to Apple stock? The company is actually up today on the news, but the actual rebalancing is not going to occur for a few weeks. In today’s screencast we look at the Nasdaq 100 rebalancing.
Items mentioned in the above screencast:
The worst index in the world. (IndexUniverse)
How did the Nasdaq 100 get here? (Kid Dynamite)
Taking a bite out of Apple. (FT Alphaville)
The new Nasdaq. (Big Picture)
A good day to buy Apple? (Apple 2.0)
@herbgreenberg, “Here’s a question: Will this be a slow bleed out of $AAPL until May 4; w/rebalancing? Then sudden shock? Or no shock?” (Twitter)