We hope this tutorial has given you insight into how you can track the market, use it as a benchmark and make investments.

Some points to remember:
  • An index is a statistical measure of the changes in a portfolio of stocks representing the overall market.
  • The first index was created by Charles Dow in May 1896. It has evolved into what we know today as the Dow Jones Industrial Average (DJIA).
  • The DJIA uses price-based weighting, but most of the other indexes use market capitalization based weighting.
  • The DJIA contains 30 of the largest companies in the U.S. It is what most people are referring to when they talk about "the market."
  • The S&P 500 includes 500 of the largest U.S. companies. More and more, it is seen as the benchmark of the U.S. stock market.
  • The Nasdaq Composite Index represents all the companies on the Nasdaq. It is heavy with tech companies and is more volatile than other market indexes.
  • The Wilshire 5000 Total Market Index contains more than 6,500 stocks and is the largest index in the U.S.
  • The Russell 2000 measures the performance of small caps that often get left out of the other big indexes.
  • There are literally thousands of other indexes, tracking various regions and industries.
  • Most mutual funds don't beat the market.
  • Index funds have lower expense ratios than other mutual funds and allow investors to get the market return.







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