24/7 Wall St.
12-22-2008, 08:40 AM
24/7 Wall St. Daily News
http://www.247wallst.com/images/2008/12/22/sad_clown.jpg (http://247wallstreet.typepad.com/.shared/image.html?/photos/uncategorized/2008/12/22/sad_clown.jpg)It used to be that a large cap stock was defined by S&P as having a market cap of $5 billion. Because of the market drop, they revised that to $4 billion in September and now the figure is going to $3 billion. At the current rate it could be $1 billion by the end of next year.
According to (http://www.marketwatch.com/news/story/As-values-tank-SP-redefines/story.aspx?guid=%7B3AA58A15%2D0A01%2D49E6%2DBC70%2 DA73EBEB6CE21%7D) MarketWatch, "These moves reflect the move [in value] in the market," said David Blitzer, managing director and chairman of S&P's Index Committee. "Had we left the $4 billion requirement for the S&P 500, some companies would've had to drop off."
Maybe they should and the S&P 500 could be become the S&P 357.
Individual investors often benefit from being in large caps. Part of their market value often derives from their cash position. A firm with $1 billion in cash on its balance sheet is more likely to have a multi-billion market cap than one with $100 million and a lot of debt. Market cap often means "safety" whether that is true or not.
Being a large cap stock has lost some of its shine. But, at some point no American company may make the new cut-off.
Douglas A. McIntyre
http://feeds.feedburner.com/~f/typepad/RyNm?i=meDuO (http://feeds.feedburner.com/~f/typepad/RyNm?a=meDuO) http://feeds.feedburner.com/~f/typepad/RyNm?i=d94pO (http://feeds.feedburner.com/~f/typepad/RyNm?a=d94pO) http://feeds.feedburner.com/~f/typepad/RyNm?i=49QQo (http://feeds.feedburner.com/~f/typepad/RyNm?a=49QQo)
complete story here... (http://www.247wallst.com/2008/12/sp-large-caps-n.html)
http://www.247wallst.com/images/2008/12/22/sad_clown.jpg (http://247wallstreet.typepad.com/.shared/image.html?/photos/uncategorized/2008/12/22/sad_clown.jpg)It used to be that a large cap stock was defined by S&P as having a market cap of $5 billion. Because of the market drop, they revised that to $4 billion in September and now the figure is going to $3 billion. At the current rate it could be $1 billion by the end of next year.
According to (http://www.marketwatch.com/news/story/As-values-tank-SP-redefines/story.aspx?guid=%7B3AA58A15%2D0A01%2D49E6%2DBC70%2 DA73EBEB6CE21%7D) MarketWatch, "These moves reflect the move [in value] in the market," said David Blitzer, managing director and chairman of S&P's Index Committee. "Had we left the $4 billion requirement for the S&P 500, some companies would've had to drop off."
Maybe they should and the S&P 500 could be become the S&P 357.
Individual investors often benefit from being in large caps. Part of their market value often derives from their cash position. A firm with $1 billion in cash on its balance sheet is more likely to have a multi-billion market cap than one with $100 million and a lot of debt. Market cap often means "safety" whether that is true or not.
Being a large cap stock has lost some of its shine. But, at some point no American company may make the new cut-off.
Douglas A. McIntyre
http://feeds.feedburner.com/~f/typepad/RyNm?i=meDuO (http://feeds.feedburner.com/~f/typepad/RyNm?a=meDuO) http://feeds.feedburner.com/~f/typepad/RyNm?i=d94pO (http://feeds.feedburner.com/~f/typepad/RyNm?a=d94pO) http://feeds.feedburner.com/~f/typepad/RyNm?i=49QQo (http://feeds.feedburner.com/~f/typepad/RyNm?a=49QQo)
complete story here... (http://www.247wallst.com/2008/12/sp-large-caps-n.html)