Index Investing: The Nasdaq Composite Index
  1. Index Investing: Introduction
  2. Index Investing: What Is An Index?
  3. Index Investing: The Dow Jones Industrial Average
  4. Index Investing: The Standard & Poor's 500 Index
  5. Index Investing: The Nasdaq Composite Index
  6. Index Investing: The Wilshire 5000 Total Market Index
  7. Index Investing: The Russell 2000 Index
  8. Index Investing: Other Indexes
  9. Index Investing: Index Funds
  10. Index Investing: Conclusion

Index Investing: The Nasdaq Composite Index


The Nasdaq Composite Index represents all the stocks that trade on the Nasdaq stock market. The recent surge in popularity of technological stocks has launched the Nasdaq into the spotlight. Consequently, the composite index has become one of the premier indexes in the world.

Don't confuse the Nasdaq composite with the Nasdaq 100, which is made up of the 100 largest non-financial companies on the Nasdaq stock market.

Created By: The NASD in 1971
Number of Companies: 3,000+
Types of Companies: Contains all of the companies that trade on the Nasdaq. Most are technology and Internet-related, but there are financial, consumer, bio-tech and industrial companies as well.
Selection Criteria: If a stock trades on the Nasdaq, it is included in the index. With certain restrictions on security types such as close-end funds, preferred stocks, rights, warrants, convertible debentures
How it\'s Calculated: The Nasdaq Composite is a capitalization-weighted index, with each company weighting being proportionate to its market value.

Advantages: The Nasdaq Composite is heavily weighted in technology and Internet stocks. As such, the companies listed in the Composite are considered to have high growth potential.
Disadvantages: Companies on the Nasdaq tend to be more speculative and risky than those listed on the New York Stock Exchange (NYSE). Because of this, the Nasdaq composite index is much more volatile than other broad indexes. The advantage of being mostly tech can also be a disadvantage. That is, when tech suffers, so does this index.
Investing: There are several index funds that track the Nasdaq composite such as the Fidelity Nasdaq Composite Index Fund. The QQQQ, formerly known as the QQQ, is the Exchange-Traded Fund (ETF) that tracks the Nasdaq 100.
Index Investing: The Wilshire 5000 Total Market Index

  1. Index Investing: Introduction
  2. Index Investing: What Is An Index?
  3. Index Investing: The Dow Jones Industrial Average
  4. Index Investing: The Standard & Poor's 500 Index
  5. Index Investing: The Nasdaq Composite Index
  6. Index Investing: The Wilshire 5000 Total Market Index
  7. Index Investing: The Russell 2000 Index
  8. Index Investing: Other Indexes
  9. Index Investing: Index Funds
  10. Index Investing: Conclusion
RELATED TERMS
  1. NASDAQ Global Market Composite

    An index made up of stocks that represent the Nasdaq Global Market. ...
  2. NASDAQ Global Select Market Composite

    A market capitalization-weighted index made up of U.S.-based ...
  3. Nasdaq Composite Index

    A market-capitalization weighted index of the more than 3,00 ...
  4. Composite

    A grouping of equities, indexes or other factors combined in ...
  5. Composite Index

    A grouping of equities, indexes or other factors combined in ...
  6. Nasdaq 100 Index

    An index composed of the 100 largest, most actively traded U.S ...
RELATED FAQS
  1. Where can I find all of the stocks in the Nasdaq Composite Index?

    Few stock market indices are as misunderstood as the Nasdaq Composite Index. Due to the burst of the dotcom bubble in 20 ... Read Answer >>
  2. Why is the Nasdaq more heavily weighted to tech stocks than other stock exchanges?

    Learn how the Nasdaq attracts technology companies due to its focus on using advanced financial technology to improve the ... Read Answer >>
  3. What is the difference between the QQQ ETF and other indexes?

    Find out more about the PowerShares QQQ Trust, the index the QQQ tracks, and the difference between QQQ, the SPY and Nasdaq ... Read Answer >>
  4. What are the most important equity market indexes?

    Discover the most important equity market indexes. Stock market indexes are tools to evaluate the performance of the stock ... Read Answer >>
  5. How do you compare the Dow Jones Industrial Average (DJIA) and the Nasdaq?

    The Dow Jones and Nasdaq work in different ways to signal market trends. Learn which is best for you. Read Answer >>
  6. What are the advantages and disadvantages of listing on the Nasdaq versus other stock ...

    Discover some of the primary advantages and disadvantages that exist for companies listed on the Nasdaq exchange rather than ... Read Answer >>

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