Word: indexable
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Widespread among economists and politicians are two standard beliefs about the behavior of prices in the U.S. in recent years: 1) from 1952 through 1955 the Government's cost-of-living index held steady only because an increase in the price of manufactured goods was balanced by a decrease in food prices; 2) today the main inflationary factor in the economy is a vicious circle in which big unions keep pushing up wages and big corporations keep pushing up prices...
...majority of stocks are doing. Present published daily averages are computed on the basis of a small, hopefully representative sampling of stocks that often does not show the action of the market as a whole (TIME, Jan. 14). This week Standard & Poor's announced a weighted index of 500 stocks representing 90% of the total value of all stocks listed on the exchange. Said Standard & Poor's President Charles A. Schmutz: "It will be the most complete and technically accurate measure of the market ever devised." The new index will be carried hourly on the tickers...
True Average. A big advantage of the new index is that it will give the investor a true idea of the average price of a single share of stock-a figure that has been lost in the inflated statistics of almost all market averages. On Dec. 31, for instance, Standard & Poor's daily industrial index closed at 498.9 and the Dow-Jones industrial average at 499.47, yet the New York Stock Exchange reported that the average value of one share of stock on that date was only $49.12, or about one-tenth as much...
...remedy this discrepancy. Standard & Poor's will compile its total on a base of 10 instead of the present 100, junk the present 1935-39 base years in favor of a 1941-43 base, when the average price of a single stock was $10. Thus, the new index will start off with a figure very close to the actual average price of one share of stock, and its fluctuations will accurately reflect the price fluctuations in the market as a whole...
...floor, can recognize and signal mistakes in quotations in a matter of seconds. The system is so swift that it would be possible to average all the 1,500 shares listed on the exchange, on an hourly basis. But Standard & Poor's feels that the new index will do just as well, since the stocks not in the index are little traded, have little effect on the market...