Expert: Dr. Joseph de Beauchamp - 6/18/2007

Question
I am aware that when a company is added to the S&P 500. It’s price can be driven up. I would like some instruction on how to find companies which may be added to the S&P 500.

Answer
There does not appear to be any good solid proof of this. It is not a fact. Mostly the cause of this increase is the weak reporting of the big twelve. When one of the broker dealers decides to cover a company, then they all do. The best way to discover this coverage, you might go to http://www.hoovers.com Then look under earnings estimates. You can track the number of reporting broker dealer coverages this way. When the number starts to move from zero to twelve, this will tell you that the big 12 broker dealers are involved. This is a more meaningful way to discover the activity level of the broker dealer, and works in reverse as well. Look at the number of earnings estimates in the hoovers site. You will find companies that are usually part of the S&P, and sometimes you will not.

Dr. Joseph de Beauchamp