Cairn departs FTSE100

SMB_2

I'm led to beleive that Cairn is due to depart the FTSE100 due to indifferant returns from it's Indian drilling site. Whilst dropping out of the FSTE would normally trigger me to sell, should I hold considering the high price of of the barrel of oil. Is it also the case that the artifically high price of oil is maitaining false profits that will not be sustainable in the long term and I should realign my portfolio to include more non-oil companies.

SMB_2

I think I've answered my own question. Cairn shares are up 33p on the day (2.78%), this is 180p up on when I bought them. Sell is what I'm doing.

blinko

i think they will bounce back up but i think they will have to go down first, it seems since jpmorgan i think issued the sell on cairn they havent been doing too well, but i disagree with oil the prices i think they are sustainable because

oil is running out
its becoming more expensive to extract oil
the middle east is a mess

gustav

SMB wrote:

... Whilst dropping out of the FSTE would normally trigger me to sell...

Really??
Of all the reasons for selling a share, that would be pretty near the bottom of my list.

SMB_2

I should have said that dropping out of the FTSE100 normally triggers me to re-evaluate my shares, not sell. Indeed I've bought shares of companies that have just dropped out.

gustav

SMB wrote:

I should have said that dropping out of the FTSE100 normally triggers me to re-evaluate my shares, not sell. Indeed I've bought shares of companies that have just dropped out.

Ok. Forgive you now.

SMB_2

Thanks gustav (pssst I've got some Cairn shares going cheap:rolleyes: )

Reaper

I've been wondering something...

When a company falls out of the FTSE100 presumably all those FTSE100 share trackers have to dump their holdings. Does that have a significant effect or are the sums involved not big enough?

If it does have an effect the logical thing to do before a company exits is to sell any holding you have in it, then rebuy them later once all the forced sales have finished pushing the price artificially low.

Would this work?

SMB_2

To a certain extent yes, but the share trackers don't all sell on one day. It is normally know for a while if a company is going to fall out of the FTSE100 and the share price will reflect this from quite far out. As this takes a period of time to readjust, other KPI factor may or may not have a greater share price effect. S&N are example of a company that yo-yo in and out of the FTSE due to a combination of performance and tracker fund sell offs. I just go by gut feel!!!!