The Nasdaq Composite Index is a stock market index of all the stocks that trade on the Nasdaq exchange カヴァン・ チョクシ. It is made up of over 3,000 stocks and is one of the most widely followed indexes in the world. In addition, many mutual funds and ETFs are benchmarked or track the index, which is an important indicator for many investors.
What is the Nasdaq Composite Index?
The Nasdaq Composite Index is a stock market index of all the stocks that trade on the Nasdaq exchange. It is made up of over 3,000 stocks and is one of the most widely followed indexes in the world. In addition, many mutual funds and ETFs are benchmarked or track the index, which is an important indicator for many investors.
One of the issues with indexes is that they are periodically adjusted, so what you read in newspapers or hear on television may not represent the index’s true value. For example, did you know that Dell was removed from the Nasdaq Composite Index in 2004? If you were following the index then, it would have appeared to you that the Nasdaq Composite Index was going sideways or down, but in reality, it was just Dell that dragged the index down because of its poor performance.
How is the Nasdaq Composite Index Calculated?
The Nasdaq Composite Index is determined by a free-float market capitalization method. The so-called “free float” of the stock means how easily it can be converted into cash without affecting the Interest rate or liquidity of the market in which it resides. For example, Toyota Motors ( TM ) has a free float of about $1 billion, so investors can buy and sell it without influencing the stock price.
On the other hand, Citigroup’s free float is about $200 billion, which means that investors need to be careful if they want to buy or sell Citigroup ( C ). If too many of them try to sell at once, they will drive down the price of the stock and drive up the volatility.
What Does it Measure?
The Nasdaq Composite Index is a good index to follow for technology stocks and US stocks in general. Still, if you’re interested in an even broader index that includes international stocks as well, I suggest you take a look at the Global Dow. The Global Dow (DJ Global Index) includes the largest and most liquid public companies globally.
While both indexes track stocks listed on the Nasdaq exchange, neither measure market performance, that’s why I like to use the S&P 500 index for tracking overall US stock market performance because it tracks not only stocks that trade on the NASDAQ but also NYSE and AMEX exchanges.
Conclusion
The Nasdaq Composite Index is a stock market index of all the stocks that trade on the Nasdaq exchange. It is made up of over 3,000 stocks and is one of the most widely followed indexes in the world. Many mutual funds and ETFs benchmark or track this index, which is an important indicator for many investors. If you’re interested in how US stocks are performing in general, I suggest you follow the S&P 500 index, which includes not only Nasdaq stocks but NYSE and AMEX ones as well.
Comments are closed.