Stock Indexes
Date Added: August, 1999
By Chris Stallman
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Have you
ever heard someone say "the market is up today"? Well,
if you have and didn't know what they were talking about, they
were referring to stock indexes.
What is a Stock Index?
Like a mutual fund, a stock index is a collection of
stocks. This index tells investors how the stocks in the index are
doing as a group.
Stock
indexes are given a value, or basically a number such as 2500. When
this value goes up, it means the stocks in the index are generally
moving up. When the value drops, then the stocks are generally going
down.
Why Do People Use Stock Indexes?
Stock indexes
are great because they let you see how the market is doing as a
group. If you were to get out a newspaper or log onto the internet,
you would have to look at hundreds and thousands of stocks just
to see how the overall market is doing. By looking at a stock index,
you can get an idea of how stocks did overall without having to
look at all of the stocks.
How Many Stock Indexes
Are There?
There are countless
indexes but, as a young investor, there are really only three that
you really need to know about.
The Dow,
commonly referred to as "the Market", is a stock index
made up of 30 different stocks. This index has been around for over
a hundred years. Since then, the index has risen from 50 up to 10000,
where it stands today.
The NASDAQ
is another stock index that tracks stocks that are in the NASDAQ
stock exchange. It is currently at around 1200.
The S&P 500
is probably the most important
stock index. It is made up of 500 large, well-known companies like
Microsoft. The stock index is currently at about 1100.
Now that you know a little about stock indices, you
can continue on and learn about our very own index, the Young30!
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