market not sharing wall st optimism, page-30

hardballgets (some name lol).. thank you for your post along with everyone else.

I err with your opinion of the long term support of a index. I mean if you look back to the 1900's your looking at rail road companies and now you are looking at semiconductors, we all know that BHP moves in an entriely different fashion to IBM and this has to effect the index... which is evident in the past 20yrs or so with the inclusion of Technology stocks, the PE range on the S&P 500 used to stay in well defined boundried, now that has been moved up thanks to the nature of Technology stocks, such is the changes.

You can see a chart of these PE Ranges in a article I had published last year... scroll down a bit:

http://www.afsd.com.au/article/zinc.html


I think the only way to solve the issue is not to use a index that involves prices, but instead a index that tracks the total value of the exchange with adjustments made when I new stock is issued etc.

The best way is of course to understand the nature of each stock in a index and then project what the index would do from there. As gann stated:

"The power to determine the trend of the market is due to my knowledge of the characteristics of each individual stock and a certain grouping of different stocks under their proper rates of vibration"

To the other question about what the date there is of on that graph, its been that long since I got it I can't give a honest answer myself. I think originally it was of all the stocks as there where not many and then gradually worked in to the top 200. I know when I took the dataset over, the ASX 200 was been used and that goes right back to the early 1980's when the ASX 200 was officially created.

The same issue is on every index though, the Dow Jones originally only started with 12 stocks.