Index funds usually have to buy shares in proproti
Post# of 32990
(Total Views: 579)
Posted On: 07/26/2019 7:46:42 AM
Index funds usually have to buy shares in proprotion to how that company is represented in the index. So if it has a small valuation by the market, it is going to make up a tiny percentage of that index and of course may end up due to rounding, with only one share!
Amazon is an example, where if you don't make earnings expectations by a small amount, the stock can go down, even though they are making money hand over fist! I own IBM stock since I was an employee years ago. I can't count how many times the stock went up in anticipation of earnings, then they miss earnings or revenue or upon further analysis the earnings were a result of things like currency translations, or them buying back shares, and then the stock drops! IBM can even be very volatile around earnings. Of course IBM has been a disappointment for longterm holders like me, but it is not the company that I worked for many years ago. I mostly hold my IBM stock for sentimental reasons, and it still pays an excellent dividend that I actually just automatically reinvest. It is a piece of my retirement nest egg, although not a big piece.
Amazon is an example, where if you don't make earnings expectations by a small amount, the stock can go down, even though they are making money hand over fist! I own IBM stock since I was an employee years ago. I can't count how many times the stock went up in anticipation of earnings, then they miss earnings or revenue or upon further analysis the earnings were a result of things like currency translations, or them buying back shares, and then the stock drops! IBM can even be very volatile around earnings. Of course IBM has been a disappointment for longterm holders like me, but it is not the company that I worked for many years ago. I mostly hold my IBM stock for sentimental reasons, and it still pays an excellent dividend that I actually just automatically reinvest. It is a piece of my retirement nest egg, although not a big piece.
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