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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.
Asset Classes Guide
Money earned can either be consumed or saved. When money is saved it can either be hoarded or be invested to enhance its value. An investment project requires information about the various avenues available. The general term used to refer to the...
Raising Money
Raising Money It isn't cheap. It isn't easy. The winners in the rush for risk capital are the CFOs (Chief Financial Officers) who understand how to play the money game. Private companies seek risk capital from American Venture Capital Firms (VCs)...
The Cost of Green Eggs and Ham
Young readers know that March 4th is the birthday of Dr. Seuss. Many parents trip their tongues over Seuss stories like "Green Eggs and Ham". "Do you like green eggs and ham?/I do not like them, Sam-I-am./I do not like green eggs and ham"....
The Overlooked Stock Market Miracle
Are you chasing stock returns that just haven't materialized? Don't forget the easily overooked index funds. Not as glamorous, but a money maker overall. Do you know which one out performs 80% of the market?
Would you like to beat 80% of the...
Tips for investing
Many people want to take advantage of the opportunity to invest as a way to supplement their income, but few people have the knowledge or the time to monitor stocks and they are reluctant to pay the high fees associated with full-service brokers....
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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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