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

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
Related Articles
  1. Insights

    How Nasdaq Makes Money

    NASDAQ provides a marketplace which offers money-making opportunities to investors. Investopedia explains how NASDAQ makes money.
  2. Insights

    What's The Difference Between The Dow And The Nasdaq?

    The way people throw around the words “Dow” and “Nasdaq” makes them seem synonymous with “the market.” But there are important differences.
  3. Tech

    Which Digital Currencies Is Nasdaq Backing?

    Stellar, litecoin, and bitcoin are among Nasdaq's picks.
  4. Investing

    Top 3 Biotech ETFs (XBI, IBB)

    Learn about three popular ETFs in the biotechnology sector, how they differ, and which ones may be appropriate for long term investors.
  5. Investing

    Top 3 NASDAQ-Listed Stocks for 2016 (AAPL, GILD)

    Learn about the top stocks listed on the NASDAQ for 2016. See how Netflix stock has risen dramatically in 2015 and could grow further.
  6. Investing

    Index Investing

    Get to know the most important market indices and the pros and cons of investing in them.
  7. Insights

    NASDAQ, Amazon, Facebook Hit All-Time Highs (AAPL, AMZN)

    The Nasdaq Composite Index hit a record high of 5,275.91 at close Tuesday, following up a handful of all-time highs in August.
  8. Insights

    Nasdaq 100 Will Continue to Outperform S&P 500: Goldman Sachs

    Goldman Sachs predicts that stronger domestic economic growth and exposure to mushrooming markets will further lift the Nasdaq 100’s main constituents.
  9. Trading

    Capitalizing on the Nasdaq 100's New Highs

    With the tech-heavy index making new highs, traders could profit from following the trend and focusing on names showing relative strength.
  10. Financial Advisor

    4 Top U.S. Equity Index Mutual Funds

    These four funds are among the best U.S. equities index mutual funds for core holdings in your investment portfolio.
Trading Center