Stock Pickins » stock index

what is a good stock market index?

admin — Sat, 01 May 2010 16:07:12 +0000

I would like to know what makes a good stock market index and the factors affecting the structure of the index?

Broad, accurate, and diversified scope for investing purposes. although the definition of "good" is subjective.

In the big picture (not for investing purposes) an index is suppose to accurately represent "something." If it does, then it is doing its job and is "good."

In the case of investing, you must first ask what is your purpose. If you are trying to represent the US stock market, for example, you want something that is accurate in a meaningful way. The S&P 500 accurately represents "the US stock market" in terms of dollar value. Unlike the DOW, it captures the lions share of the dollar value of the US market on any given day.

On the other hand, if you want to measure "all" or the US market (not just the biggest piece) you will need to use something like the Russell 3000 (98% of the investable market).

Does a stock price index reflect the actual value of a market index based portfolio?

admin — Thu, 01 Apr 2010 16:52:15 +0000

If I were to buy a portfolio of stocks of, say, $ 10,000, with the same composition and in the same proportions as the S&P500 and, after one year that index had a variation of, say, +15%, would my portfolio be worth exactly $11,500? If not, why?

No. There are transaction costs. So the difference would be the commissions on the 500 stocks that are in the s&p500, (which would be considerable since you’re dividing 500 stocks into only $10,000)–remember there’s a price for EACH trade.

You’d be better off buying an ETF that replicated the S&P500 index so that you only pay the one commission for the trade. BUT you’d still always UNDERPERFORM the benchmark index because of the transaction costs and imbedded management fees.

Does anyone know where I can find a list that shows the quantity of each stock in Dow index?

admin — Mon, 08 Mar 2010 15:02:59 +0000

I know the list of 30 stocks, but I am looking for how many shares of each individual stock.
All the sites I have looked up so far just give the the name, ticker symbol and quote.

The DJIA is a price-weighted index, meaning that it is not calculated by changing the number of shares of each stock. This is in contrast with the S&P500, which is market cap-weighted.

In the DJIA, the prices of the 30 component stocks are added and then divided by something called the Dow divisor, which is constantly adjusted. The divisor is in place to buffer for the effects of price changes from events like splits or dividends. The divisor is currently 0.132319125.

If you need more info, these articles explain it in detail:
http://www.djaverages.com/?view=industrial&page=calculation
http://www.investopedia.com/articles/02/082702.asp
http://www.investopedia.com/articles/exchangetradedfunds/08/index-debate.asp

Hope that helps!

What is the best stock index to invest in?

admin — Sun, 14 Feb 2010 08:14:38 +0000

still learing about stock markets but was wondering what stock market I would be most likely to make a long term profit from investing in. My friend said Nasdaq…any ideas??

Easy answer but you are probably not going to believe me. Unfortunately people always prefer to make investing (also life in general) harder than it has to be.

1. Identify all the broad market index’s that you are considering investing in, whether in be in the United States, Brazil, China, Europe, Emerging Markets …etc. If you want to really be detailed, you can also identify sub sectors if you want to…Technology, Health Care, Financial’s, Commoditieses, Retail, Consumer Staples..etc

2. Find Mutual Funds or ETF (Exchange Traded Funds) that emulate these index’s, and track them on Yahoo Finance site under My Portfolio. Have the same start or trade date for all…example..first trading day of 2010.

3. Invest in the Index that is going up the most in comparison to the others…you could even invest in more than one Index if you like. These will change over the years. Example, the Nasdaq was the leader for US index’s during the dot com era.

3. Track results and always stay with the Index or Index’s that are leading the others. Just as if you were tracking winning sports teams.

4. Good rule of thumb is to stay invested in an Index as long as it is trading above it’s 200 day moving average. You can find this by selecting the 200 day simple moving average (SMA) under the charting program on Yahoo Finance. Select technical indicator and enter 200 on simple moving average. When the index trades under the 200 day…move to money market or scale down your investments. I prefer being "out of the market" when it trades below 200 day moving average.

Where can i get the list of major stock index used by all countries worldwide?

admin — Thu, 31 Dec 2009 09:40:44 +0000

How do investors and analysts make use of these indexes?

Here’s a list of 15min delayed quotes of major world stock indices on Bloomberg.
http://www.bloomberg.com/markets/stocks/wei.html

What does benchmark index in stock market means?

admin — Wed, 11 Nov 2009 00:04:38 +0000

How does the company calculate benchmark index and how do you measure it with your own funds?

http://www.investopedia.com/terms/b/benchmark.asp

Which equity Index or Stock Exchnage the Forex Market tracks During the Asian session?

admin — Sun, 25 Oct 2009 03:52:44 +0000

Can anyone please explain to me to forex tracking in asian session like it tracks Dow Jones Industrial average in american session?

Thank you.

The major stock indices trading during the Asian session are the Nikkei 225 (Japan), Hang Seng (Hong Kong) and the S&P/ASX 200 (Australia).

The Nikkei 225 and Hang Seng are probably the most important to watch in terms of the forex market, and the S&P/ASX 200 if you’re trading the Australian Dollar.

What exactly is a stock index?

admin — Wed, 21 Oct 2009 06:23:44 +0000

I have read the definition numerous times, but I need some clarity on what exactly a stock index is and how investors use index’s to compare to their portfolio performance. Also how do people compare an index performance to a mutual fund? Thank you

stock market index is a listing of a group of stocks, and a number to go with them. The number that goes with them is used to track trends in the market, going up or down when the market does. In general the stocks have something in common, such as trading on the same exchange, or belonging to the same industry. The Indexes can be classified in a wide variety of ways. The most widely quoted Index in the world, the Dow Jones Industrial Average, is a broad based index designed to reflect the stock market as a whole and give an idea of investor sentiment on the state of the economy.

What is the relationship of the Philippine Stock Market to Wall Street and the Dow Jones Index?

admin — Wed, 07 Oct 2009 15:50:11 +0000

Are the prices of Philippine stocks dependent on Wall Street or the Dow Jones Index? Because I read in news that prices in Philippine stock rises or falls because prices in Wall Street or the Dow Jones index rose or fell.

As Philippines is economically it will be dependent on stock markets too

how to hedge a portfolio exactly replicating a stock index, ensuring same value in 6 mths, w/o options & CFDs?

admin — Thu, 01 Oct 2009 19:44:53 +0000

how do i hedge a portfolio fund which exactly replicates a certain stock index? I want to ensure that the portfolio value will be the same 6 months later. There are no exchange-traded options and no CFDs available on this stock index.
Help is much appreciated.

I am always using this site every time I have a question about options. I believe it will help you. Check out allmarketpicks.webs.com . And go to their learning center