About The
     SecurityStockWatch.com 100 Index

The Security Industry has emerged as an important segment of the stock market and this reflects the growing prominence of the security sector in world markets. We created the SecurityStockWatch.com 100 Index to monitor the performance of this fast growing sector and we believe it is the broadest and most reliable indicator available.

When we set out to create an index to monitor stocks that make it their business to deal with current security issues, we faced a number of issues:

• Could we create an index that would be broad enough to avoid major swings on the dramatic movements of only a few stocks?
• How large a universe and what kinds of security concerns should we address?
• What kind of calculation method would we use to avoid a few large-cap stocks from dominating the index?

We settled on 100 as the minimum number of stocks that would give us the breadth we wanted for our index and we included security companies that fall into the following most logical groupings:

• BioDefense Group
• Environmental Security
• Identity Theft
• Military Defense
• Network Security
• Physical Security

We decided that the search for investment opportunities would probably be most fruitful in the small and mid-cap sectors, but felt that we should also include some of the really large companies who have important roles in security issues.

For calculating the Index, we selected an Equal-Dollar Weighted method as the best method available for the relatively small size of our Index. The Capitalization-Weighted methods applied to the really broad indexes of today (S&P 500, NASDAQ, and various Russell 000’s), whereby every stock movement only impacts the index by its market capitalization relative to the entire index is ideal, since no one, or two, or even three big stocks can really distort the average by much. The Equal-Dollar Weighted method gives SecurityStockWatch.com the ability to give effect to the relative sizes of stock prices, while avoiding the tyranny of a few large-market cap companies causing major fluctuations by running counter to the trend of the group.

Our method sets a market value for each company at the same amount. We use $10,000 for each company, which yields a $1 million total market value for the Index. Each company is then assigned the number of shares that gives it a $10,000 market value and the calculating begins with assigning the index a starting value of 100, and adjusting it by the impact of closing prices each month. The SecurityStockWatch.com 100 Index commenced with a value of 100 on December 31, 2002.

To keep the Index from getting out of equilibrium, it is rebalanced quarterly on the third Friday of the quarter-ending month, which coincides with the triple witching of index futures, index options and stock options.

The SecurityStockWatch.com 100 Index, we believe, is the most reliable indicator available regarding the performance of security stocks as a whole.

Click on any of the links below to learn more about:
>>What Is a Stock Market Index?
>>SecurityStockWatch.com 100 Equal-Dollar Weight Index: Structure and Methodology
>>SecurityStockWatch.com 100 Index Monthly Chart and Commentary Archive