A Little History On How The Stock Market Started |
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| By Arthur McCain |
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| The Standard & Poor's 500 is an index of 500 of the most
widely held stocks - leading companies from all sectors of
the economy - chosen for their market size, liquidity, and
industry group representation. By 1896, The Wall Street Journal was publishing its average on a regular basis, and the most famous indicator of stock market health was born: the Dow Jones Industrial Average. Most people have heard of the Dow, as well as a few other well-known stock indexes that track the overall direction of the market. Indexes and averages serve as useful benchmarks against which investors can measure the performance of their own portfolios. Depending on its makeup, a stock index can give investors some idea about the state of the market as a whole or a certain sector of the market. Conceptually, a shift in the price of an index represents an equitable change in the stocks included in the index. If your portfolio lags substantially behind a corresponding index, it may be time to reevaluate and reallocate assets. Be sure to select an appropriate index as your benchmark. For example, comparing a small-cap stock portfolio to the Dow Jones Industrial Average may not be very meaningful; comparing it to the Russell 2000 Index would be more appropriate. When selecting stocks, it's prudent keep an eye on promising long-term performance based on certain fundamentals that may or may not be subject to market trends. Conventional wisdom says if you have several years until retirement, you should put the majority of your holdings in stocks. Stocks have historically outperformed other investments over the long term. That has made stocks attractive for staying ahead of inflation. Of course, past performance does not guarantee future results. The stock market is inherently extremely volatile. The return and principal value of stocks fluctuate with changes in market conditions. Stocks, when sold, may be worth more or less than their original cost. Is it a safe place for your retirement money? Or should you shift more into a money market fund offering a stable but lower return? The Dow is an index of widely held "blue-chip" stocks that is used as an indicator of the performance of U.S. industrial stocks. Unlike most other major indexes, the stocks in the Dow are unweighted by market capitalization. The 30 stocks included in the Dow are all major factors in their industries. Many have become household names: American Express, Boeing, Coca-Cola, General Electric, Hewlett-Packard, IBM, Intel, Johnson & Johnson, McDonald's, Microsoft, Procter & Gamble, Walt Disney, and Wal-Mart. A guaranteed interest contract offers a set rate of return for a specific period of time, and it is typically backed by an insurance company. Generally, these contracts are very safe, but they still depend on the claims-paying ability of the company that issues them. |
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| Article Source: http://interpret.zar.vg | ||||
| About The Author Want to find out more about Market Timing Mutual Funds, then visit Arthur McCain's site. market-timing.org/mutualfunds.aspx |
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