FTFM A stock index is supposed to give investors or other interested observers a sense of how the market is doing. This is the old-fashioned view.
“If I want to calculate an index that is truly representative of the market, it has to be capitalisation-weighted,” says David Blitzer, chairman of Standard & Poor’s index committees. A “cap-weighted index” gives proportional weight to different stocks depending on the value of each company as indicated by its price.
