NASDAQ rising? Yeah, it’s mostly Apple

February 23, 2012

I was listening to NPR’s market wrap during which some industry talking head, one assumes the radio face version, commented that the Dow Jones’ surge past 13,000 represented an important psychological barrier. Given that a large and growing majority of trades are now one computer algorithm selling to another computer algorithm, the notion of ‘psychologically important’ is almost laughable.

And, there’s another funny thing going on at America’s big stock exchange indices — the recent rises, at least a very big portion thereof, can be linked directly to AAPL.

Morning Morning reports that Apple share price increases are driving the recent big rise of the Nasdaq, Nasdaq-100 and S&P 500, all of which have been at or flirting with new 10 year highs and investors are almost giddy with delight.

With Apple’s impact on the Nasdaq 100 now approaching 17 percent, which is greater than Google, Amazon and Intel combined. So, it’s only a matter of time before another rebalancing takes a bite out of Apple’s influence on this important index.

See also: Electronic Trading Creates a New Financial Landscape

In April 2011 when AAPL’s rise caused it to account for 20 percent of the tech-heavy Nasdaq-100, index managers “rebalanced” the Mac, iPhone and Mac maker’s share footprint to only account for 12 percent. With its stock now trading North of $500 and it’s once again getting difficult to see any daylight between Apple and movement of the various indexes.

For example, the Nasdaq Composite index — one of the numbers the media trots out in their hourly market recaps — has been dancing around 3,000 for the first time since the year 2000 and AAPL accounts for more than 10 percent of that.

As head scratching as all of this is, here’s another thought — if the $2,000 I “invested” in a PowerMac back in 1999 had been parked in AAPL instead, that would now be worth around $110,000.

Needless to say, if you have money in an index fund, get rid of that and just buy AAPL instead…

What’s your take?

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