Re: maxi-ISAs with online share dealing facilities - which?

On Tue, 11 Sep 2007 09:04:19 +0100, "Norman Wells"
<norman@xxxxxxxxxxxxxxxxx> wrote:

What you have forgotten is that any companies that drop out of the FTSE 100
index, and several do every year, are replaced by companies that rise to
take their place. That's what the '100' in 'FTSE 100' means. Just because
some companies exchange places does not explain why the *index* of the top
100 companies, whichever they are, is now still 10% below its level 8 years
ago.

If you look at the mechanism of changes in the FTSE100, when a share
falls out it is replaced by one with a higher market capitalisation.
Consequently an arbitrary correction has to be applied to the index,
in order to avoid a step change. This correction is always in the same
direction, downwards. That is why the index is lower than it was 8
years ago.
--
Terry Harper
URL: http://www.btinternet.com/~terry.harper/
.