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List of all Articles in Stocks and Mutual Funds
Here you can browse through a list of all the article titles in this category, or maybe search for an article that you have seen before and want to read again.
If you can't find what you're looking for here then why not try our related categories section.
7 Simples Steps to Financial Freedom and Wealth Building - Step 2
Copyright 2005 William Tan
Simple Steps to Financial Freedom and Wealth Building
STEP 2: Achieve Financial Freedom - Choosing Your Escape Vehicle
Do you want to achieve financial freedom? For most people, this is constantly on their mind. If...
Buy, Sell or Hold?
What should I do? My investments are down and I don't know what to do? Should I be buying now, selling or waiting the market out? What are the successful investors doing? Here's a few ideas that could fatten your portfolio and give you a greater...
Does Your Life Include a RIPE Plan?—Planning Tips for Retirement, Investing, Protection, and Estate Planning – Part 2 (Investing)
Does Your Life Include a RIPE Plan?—Planning Tips for Retirement, Investing, Protection, and Estate Planning – Part 2 (Investing) by: Janet L. Hall After reviewing your retirement plan, or lack of one, you might have had a huge eye opener to the...
Setting Financial Goals - Part 2
In my earlier article “Setting Financial Goals – Part 1” I identified the 4 simple steps to setting up achievable financial goals. I mentioned that your financial goals should be broken down into smaller more manageable goals and then written down...
What is a Mutual Fund?
Ever wondered what is a mutual fund? A mutual fund is a pool of money run by a professional or group of professionals called the “investment adviser.” A mutual fund is a company that pools money from many investors and invests the money in stocks,...
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Stock Indexes: The Inside Story
Most of us have heard of stock indexes, but have only a fuzzy
idea of them at best. This article aims to clarify some of the
basics of stock indexes -- what they are and how they work.
What Is A Stock Index?
A stock index is simply an average price for a large group of
stocks, either those on a particular stock exchange or stocks
across an entire investing sector. Indexes are formed from
stocks with something in common: they are on the same exchange,
from the same industry, or have the same company size or
location. Stock indexes give us an overall snapshot of the
economic health of a particular industry or exchange.
Many stock indexes exist; in the United States the most well
known are: the Dow Jones Industrial Average, the New York Stock
Exchange Composite index, and the Standard & Poor 500 Composite
Stock Price Index.
How Does It Work?
There are several ways to calculate an index. An index based
solely on stock prices is called a "price weighted index." This
type of index ignores the importance of any particular stock or
the company size.
A "market value weighted" index, on the other hand, takes into
account the size of the companies involved. That way, price
shifts of small companies have less influence than those of
larger companies.
Another type of index is the "market share weighted" index. This
type of index is based on the number of shares, rather than
their total value.
Index As Investment Tool
Another huge function of indexes is that they can function as
investment instruments in and of themselves. Mutual funds based
on an index duplicate the holdings of the underlying index.
Thus, if index A rises by 1%, the Index A Mutual Fund rises by
1%. This has the tremendous advantage of lower costs. Plus these
index funds have been shown to generally outperform managed
funds.
The Big Indexes
One of the best-known indexes in the world is the Dow Jones
Industrial Average. It is a "price-weighted average" index
composed of the stocks of 30 of the most influential companies
in America. Some feel that 30 companies are not enough to form
an accurate assessment for so influential a measurement, but it
is reported around the globe daily nevertheless.
The Standard & Poor 500 Index is based on 500 United States
corporations, carefully chosen to represent a broader picture of
economic activity.
Beyond the United States, the most influential index is the FTSE
100 Index, based on 100 of the largest companies on the London
Stock Exchange. It is 1 of the most important indexes in Europe.
2 other important indexes are France's CAC 40 and Japan's Nikkei
225.
About the author:
Visit
Stock Trade to learn more. Ron King is a full-time
researcher, writer, and web developer with a Website
Here.
Copyright 2005 Ron King. This article may be reprinted if the
resource box is left intact.
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