Not the S & P 500, Nasdaq, Dow Jones Industrial Average. These terms in the news you hear thrown, and you know that these words only vaguely related investments. But not sure what any of these terms really mean. Who is it?
Here's a primer on the whole investment terminology.
Market Index - The S & P 500, NASDAQ, Dow Jones, Russell and Wilshire are examples of an index provides a summary of the overall market by controlling certain key actions in this market index "market .." An attempt by a representative overview of the direction overall market is led to give.
Not necessarily to recognize indexes all individual actions. Some tracks try small, medium and large companies represented, while other indices represent only the largest companies. Some tracks are to follow in general the companies in a particular industry, such as technology, while other indices are wider.
Fun Forum: journalist Charles Dow created the first index, more than 100 years. In 1896, Dow average share prices of the 12 largest listed companies. (He said his prices and values are divided by the total number of shares.) Where he discovered he could generally follow the movement of the market, including the general motion (on average) populations, which were not included in the financial statements.
What are the most popular market indexes?
The S & P 500 - This index 500 leading American companies in a variety of industries and sectors. Shares of the S & P 500 about 70 percent of all shares traded. "S & P" means "Standards and Poors", the name of a market research firm.
Company can be listed in more than one index. Some of the S & P 500 are in the Dow Jones Industrial Average.
The Dow Jones Industrial Average - The name of Charles Dow, the index of the 30 largest American companies. This means that the business is "large cap", which is the industry term for "Big Business", as Johnson & Johnson, McDonald's and Coca-Cola. Although the Dow Jones companies make up only about 25 percent of all shares, the DJIA is widely recognized as a leading indicator of market health.
The Wilshire 5000 Index - This index has gained 5,000 companies of all sizes and shapes, from gigantic to the smallest of small businesses. (In the terminology of the industry, be it as a "large cap", "mid-cap" and known as "Small Cap"). The Wilshire 5000 is often referred to as "Total Market Index." It is interesting that, although the representativeness of this index is not as popular or tracking the Dow Jones and the S & P-500.
The Russell 2000 - The Dow Jones focuses on large companies, but the Russell 2000 does the opposite: it follows that smaller companies. This index is 2000 smaller player on the market.
If you think that 2,000 companies is too small sample size and a wider representative snapshot of how companies are looking for small cap shrouds, you can also its sister index, check the Russell 3000.
NASDAQ - I saved this for last, because it can be a little confusing. "Nasdaq" both an index and a stock exchange. Let me give a little and give you a few facts:
There is a market where people go to buy shares. This market is called "exchange". The most famous is the New York Stock Exchange. There is also a famous called the Nasdaq Stock Market.
The shares are traded on the NASDAQ stock market tend to be technology companies like Apple and Google. Of course, companies in the Nasdaq means to be not as big as these two symbols. Small companies like Angie's List (the site that offers peer-to-peer reviews of home repair contractors) and 1-800 Flowers, (the site which offers flowers) are also listed on the Nasdaq Stock Market.
Nasdaq traded banks, airlines, including Spirit Airlines, and even some non-technology companies such as Starbucks and footwear company Steve Madden. In other words, there is no plaster model law that says high-tech companies traded on the Nasdaq. Nasdaq tends usually just a lot of high-tech companies keep.
The Nasdaq market index, known as the "Nasdaq Composite", follows the 3,000 companies listed on the Nasdaq. What is unusual because no other change has its own popular index. The evening news is not the stats read "New York Stock Exchange composite."
Large and small - - do the Nasdaq Composite has due to its wide acceptance as a shorthand indicator of how industry and technology-innovative companies become popular.
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