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There are 2 major things to look at when considering these 2 indices(I invest in the S & P and not the NASDAQ as a preface, but here are some details):

Current set up:

If you look at the S & P 500, alot of the stocks are from the NYSE which contains alot of what I'd call US Titan like stocks: GM, GE, Lucent, IBM, etc. While the NASDAQ has a much more top-heavy appearance as Cisco, Microsoft and Intel make up about 21.68%(As of May 18,2000 close, here's a link for the most recent list of 100 stocks: ) of QQQ which is a Nasdaq 100 tracker. Compare this to the top 3 of the S & P 500(GE, Cisco and Intel) that make up 11.4% so it should be clear that part of Nasdaq's gains are from concentration that works both ways as you've likely seen in recent months can soar and crash but this is what happens.

Make-up issue:

This is more about how the 2 indices are made realize there are some big differences here. First, the S & P 500 is a committee chosen index of 500 stocks that in recent years has had about 40 changes/year that at least in my view make it somewhat interesting. The Nasdaq actually has 2 parts: The 100 and the Composite(Which has over 3,000 stocks) so part of it depends on which the fund is tracking.

I'd also suggest posting this on the Index Funds board as you may get more answers there too.

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