IntermediateMAD Academy0:45Markets

Weighting Decides What You Own

Two indexes of the same 500 companies can behave completely differently, because the weighting rule is the real strategy.

0:45 · 6 scenes

This lesson is part of a MAD Academy plan.

What the Lesson Covers

  1. 0:00Two indexes of the same companies can behave completely differently.
  2. 0:05The three rules. Cap weighting, equal weighting, and price weighting produce three different funds.
  3. 0:15What cap weighting really means. The biggest few companies can dominate an index of five hundred.
  4. 0:24The consequence. A cap-weighted index automatically buys more of whatever has already gone up.
  5. 0:32The committee. Many indexes are not purely mechanical. A committee decides who is in.
  6. 0:40The weighting rule is the strategy, whatever the label says.
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Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Educational content only. MadStockAlerts provides market commentary, research, and educational content. It is not personalized investment advice, and nothing here is a recommendation to buy or sell any security. Trading and investing involve substantial risk, including loss of capital. See the Risk Disclosure and Customer Agreement.
Weighting Decides What You Own — MAD Academy Training Video · MadStockAlerts