An index is a measurement of the value of a batch of stocks. Basically it is a list of carefully selected companies of different industries, usually around 30, whose stocks are constantly monitored. The stock movements of these companies represent the general movement of market prices.
Investors use this measure like a barometer to track the overall progress of the market.
In the Philippines we have the PSE Composite Index or Phisix or PSEi. The companies that belong to this index are regularly audited every six months.
In the US, some of the famous stock indexes are:
- Dow Jones Industrial Average or The DOW (DJIA)
- Standard & Poor 500 (S&P 500)
- Russel 3000
- Wilshire 5000
Other International Indexes are:
Nikkei (Japan) - considered Japan’s version of the Dow. If you’re invested in Japanese stocks or in stocks that do business with Japan, you want to know what’s up with the Nikkei.
FTSE-100 (Great Britain) - Usually referred to as the “footsie,” this market-value weighted index includes the top 100 public companies in the United Kingdom.
CAC-40 (France) - This index tracks the 40 public stocks that trade on the Paris Stock Exchange.
DAX (Germany) - This index tracks the 30 largest and most active stocks that trade on the Frankfurt Exchange.
Halter USX China Index (China) - This index tracks a basket of 50 U.S. public companies that derive most of their revenues from China.
So if you hear someone asking "How’s the market doing today?” think of it this way - "How's the Dow doing?" or "What did the Phisix do?" Now you're starting to think like a financial savvy!
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