The fine folks of Nasdaq OMX
Seven new stocks were added to the tech stock gauge over the weekend, including Altera
The Nasdaq index isn't as widely mimicked as the S&P 500, of course. However, I prefer it as a market proxy, especially given its ability to be a globetrotter in landing the exchange's global powerhouses like Finland's Nokia
Investors don't need to follow suit, of course. VeriSign and Expedia are no longer worthy of making the market gauge's cut, but that doesn't mean that the stocks are no longer worthy of your investing dollars. Expedia continues to grow quickly. VeriSign should bounce back next year, and is trading at an attractive 2009 earnings multiple in the teens.
Should investors pay attention to index changes? Of course. It's a welcome form of validation for the companies going in. However, don't read too much into the companies bowing out. If anything, it may be fertile ground for value investors, assessing why those stocks fell out of favor with the market, and what it will take for them to claw their way back.