City folk; the DOW/FTSE... What if...?
Discussion
Dear fananciers and those in the city 'know'.
I've a basic handle on what's happening in the economy, how that will affect everyone, the causes & effects etc... But, I don't understand a couple of things, which I'd be grateful if you could shed light on.
The DOW/FTSE/S&P500 etc, what are these? I understand that they are a collaboration in some way of the value of X number of companies. I also understand that when their figures drop, it's bad. Especially so with the magnitude of the drops we're seeing in todays volatile markets..
What happens, say, if the DOW hits 0000.00? I see that over the past 7 sessions, it's dropped 20%; 2,200 odd points to 7900 or thereabouts. What does it mean should that figure hit zero?
And just out of curiosity, what are all the differences between the DOW/S&P etc? I take it that they are formed from different companies?
Cheers.
I've a basic handle on what's happening in the economy, how that will affect everyone, the causes & effects etc... But, I don't understand a couple of things, which I'd be grateful if you could shed light on.
The DOW/FTSE/S&P500 etc, what are these? I understand that they are a collaboration in some way of the value of X number of companies. I also understand that when their figures drop, it's bad. Especially so with the magnitude of the drops we're seeing in todays volatile markets..
What happens, say, if the DOW hits 0000.00? I see that over the past 7 sessions, it's dropped 20%; 2,200 odd points to 7900 or thereabouts. What does it mean should that figure hit zero?
And just out of curiosity, what are all the differences between the DOW/S&P etc? I take it that they are formed from different companies?
Cheers.
By and large they are baskets of shares, an average of their share price is taken weighted according to market capitalisation, indexed against a historic starting point.
The composition changes because for example the FTSE 100 is based on the 100 largest UK listed companies by market capitalisation. So every 1/4 new companies enter and leave the index
Matket capitalisation is simple the Number of Shares issued multiplied by todays price.
Because it's Mcap weighted a few large companies such as BP tend to have a disprortionate effect on the level of the index.
HTH.
The composition changes because for example the FTSE 100 is based on the 100 largest UK listed companies by market capitalisation. So every 1/4 new companies enter and leave the index
Matket capitalisation is simple the Number of Shares issued multiplied by todays price.
Because it's Mcap weighted a few large companies such as BP tend to have a disprortionate effect on the level of the index.
HTH.
Timmy35 said:
By and large they are baskets of shares, an average of their share price is taken weighted according to market capitalisation, indexed against a historic starting point.
The composition changes because for example the FTSE 100 is based on the 100 largest UK listed companies by market capitalisation. So every 1/4 new companies enter and leave the index
Matket capitalisation is simple the Number of Shares issued multiplied by todays price.
Because it's Mcap weighted a few large companies such as BP tend to have a disprortionate effect on the level of the index.
HTH.
Thanks for that, it's making sense. Given that it's indexed against against a historic starting point, industry won't grind to a halt should the index hit zero... The composition changes because for example the FTSE 100 is based on the 100 largest UK listed companies by market capitalisation. So every 1/4 new companies enter and leave the index
Matket capitalisation is simple the Number of Shares issued multiplied by todays price.
Because it's Mcap weighted a few large companies such as BP tend to have a disprortionate effect on the level of the index.
HTH.
Papoo said:
Timmy35 said:
By and large they are baskets of shares, an average of their share price is taken weighted according to market capitalisation, indexed against a historic starting point.
The composition changes because for example the FTSE 100 is based on the 100 largest UK listed companies by market capitalisation. So every 1/4 new companies enter and leave the index
Matket capitalisation is simple the Number of Shares issued multiplied by todays price.
Because it's Mcap weighted a few large companies such as BP tend to have a disprortionate effect on the level of the index.
HTH.
Thanks for that, it's making sense. Given that it's indexed against against a historic starting point, industry won't grind to a halt should the index hit zero... The composition changes because for example the FTSE 100 is based on the 100 largest UK listed companies by market capitalisation. So every 1/4 new companies enter and leave the index
Matket capitalisation is simple the Number of Shares issued multiplied by todays price.
Because it's Mcap weighted a few large companies such as BP tend to have a disprortionate effect on the level of the index.
HTH.
If the FTSE hit zero, not that is really possible (but hey, anything could happen at the moment!) it means the Top performing 100 comapnies listed on the UK stock market would all efffectively be worthless (apart from fixed assets & savings).
A crazy situation, but it would mean that billion pound companies are worth zilch. This is takeover & meltdown territory. Would be interesting to observe what happens from a bunker in teh Falkland Islands, but to live through the middle of it would be close to utter financial carnage. Of course theoretically the LSE would just list the top nect 100 performers and we all start again, but the knowck on effects of all the other major companies going belly up would be unqunatifiable.
Eastenders would probably still be on though.
A crazy situation, but it would mean that billion pound companies are worth zilch. This is takeover & meltdown territory. Would be interesting to observe what happens from a bunker in teh Falkland Islands, but to live through the middle of it would be close to utter financial carnage. Of course theoretically the LSE would just list the top nect 100 performers and we all start again, but the knowck on effects of all the other major companies going belly up would be unqunatifiable.
Eastenders would probably still be on though.
ZR1cliff said:
thegman said:
if the dow hits zero then basically western civilisation will look very different.
buy a gun.
I wonder if we have any marshal law contingency plans. Would marshal law hold up ?buy a gun.
The chavs are too lazy to riot,
Students are too busy on facebook masterbating to go on marches these days.
Leaving the baby boomers.....who are also getting a bit old for rioting.
Frankly I think we've become a pretty easy population to control without martial law.
Timmy35 said:
ZR1cliff said:
thegman said:
if the dow hits zero then basically western civilisation will look very different.
buy a gun.
I wonder if we have any marshal law contingency plans. Would marshal law hold up ?buy a gun.
The chavs are too lazy to riot,
Students are too busy on facebook masterbating to go on marches these days.
Leaving the baby boomers.....who are also getting a bit old for rioting.
Frankly I think we've become a pretty easy population to control without martial law.
What about when the chavs realise they've got no Electricty for their past times and grub in the pantry. We iz gonna be targets, innit.
ZR1cliff said:
What about when the chavs realise they've got no Electricty for their past times and grub in the pantry. We iz gonna be targets, innit.
They'll just sit there in the dark saying..... "Shazz is dark innit, woz Gov'nment doing bout it"
...but that's about as much as they'll do.
ZR1cliff said:
I wonder if we have any marshal law contingency plans. Would marshal law hold up ?
LOL, this brings into mind for me Judge Dredd or some kind of Wild West scenario!!Martial law might be a better option in the circumstances and I sincerely hope we never see it - army on the streets against the British public etc.
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