And you’re able to start by knowing about the major stock indexes.
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What Is a Stock Index?
A stock index measures a particular group of companies in the stock market.
Its the average price of the stocks for companies in the index.
The media reports on the percentage the indexs stocks collectively rise or fall during the trading day.
But you dont need to know them all; just start with these three.
So when news anchors say the market is up today, theyre usually referring to the Dow Jones average.
The Dow is one of the oldest and best-known indexes in the world.
You may have recently heard that General Electric got booted from the Dow after111 years in the index.
GE was an original member of the Dow in 1896 and remained in the index continuously since 1907.
The S&P Dow Jones Committee says adding stocks with four-digit share prices woulddistort the index.
And much like the honey badger, Amazon and Google dont care.
Those companies are picked by the same people who decide what companies are in the Dow.
This is the index used by financial professionals to gauge the health of the market.
Its updated every 15 seconds during trading hours, so it gives clear, up-to-the-minute trends in the economy.
Like right now, over a quarter of the stock in the index arefrom technology companies.
Keep its six-decade history in mind to help you make personal spending, investing and voting decisions.
Fun fact: Nasdaq is actually an acronym for the National Association of Securities Dealers Automated Quotations.
The more you know.
Half of the exchange is made up of tech companies, including Apple, Google, Amazon and Microsoft.
Why is it important?The NYSE is your grandmothers stock market, less volatile and more reliable.
The Nasdaq trades tech companies that are growing, innovative and slightly unpredictable.
If you want more technology companies in your portfolio, now you know where to find them.
We cant personalize articles for our readers, so your situation may vary from the one discussed here.
yo seek a licensed professional for tax advice, legal advice, financial planning advice or investment advice.
Jen Smith is a staff writer at The Penny Hoarder.
She gives money saving and debt payoff tips on Instagram at @savingwithspunk.
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