Stocks showing gains by quarters
- Thread starter nitro
- Start date
Thanks for the response. I don't like guessing or assuming anything I can avoid doing so. Here is what I have found out by writing some R code to do the analysis:
In the 3rd 1/4 of '06, 12 stocks were responsible for 50% of the gains [5.7%] in the SP500!!!!!!!!!!!!!!!! I couldn't believe it when I saw this and did a double take several times to make sure I did not have a bug in my code. But the conclusion is indesputable.
You figure out what this means from a trading point of view. It means everything to me as it explains a great deal about my losses.
nitro
What is also of interest is how easily even a "big" index like the SP500, can be "manipulated" into going higher by nudging the right stocks. Now think about how easy it is to do the same to the NDX or especially the DOW with only thirty stocks.
People are being duped into believing they are wealthier because they are quoted index prices by the media as a measure of their wealth. In fact, most of them are not invested in ETFs (SPY QQQQ DIA) and are invested in individial stocks. When they look at their broker statements, they scratch their head in confusion unless they are lucky enough to own those few precious stocks in their "diversified" portfolios.
Alternatively, an explanation of the rise in indeces is the massive amounts of money going into the ETFs, with the market makers hedging their exposure with those few stocks, perhaps because they are the "safest" to own. Seems like the stage is set for options expiration...
My next coding project is to get the 12 actual stocks that went higher and accout for 50% of the gains. Then I want to do the same for the fourth 1/4, given that it is only 1/3 over. The fourth 1/4 "feels" more broad, but only scientific testing will bear that out.
nitro
People are being duped into believing they are wealthier because they are quoted index prices by the media as a measure of their wealth. In fact, most of them are not invested in ETFs (SPY QQQQ DIA) and are invested in individial stocks. When they look at their broker statements, they scratch their head in confusion unless they are lucky enough to own those few precious stocks in their "diversified" portfolios.
Alternatively, an explanation of the rise in indeces is the massive amounts of money going into the ETFs, with the market makers hedging their exposure with those few stocks, perhaps because they are the "safest" to own. Seems like the stage is set for options expiration...
My next coding project is to get the 12 actual stocks that went higher and accout for 50% of the gains. Then I want to do the same for the fourth 1/4, given that it is only 1/3 over. The fourth 1/4 "feels" more broad, but only scientific testing will bear that out.
nitro
Not this 1/4. The third 1/4. I have not done the calculation for the fourth 1/4 yet. But even if you take the rolling 1/4 [which I am not], it is nowhere near 430 stocks:
http://www.indexarb.com/stockVsIndexesLeftColumn.html#sp500IndexAnalysis
The rolling 1/4 gives about 240 stocks in the SP500 that have green percentage gains, and way less than that if you do the cutoff at say + 2%.
The calculation has to take weight of underlying in index into account.
nitro