- Most famous index “NY Dow”
- NY Dow is 30 carefully selected stocks in the US
- History of Dow 30 Average Stock Price
- Difference of Dow 30 and Nasdaq?
- NY Dow is a barometer of market trends
- NY Dow has overcome many crises
- hat is the NASDAQ Composite Index?
Most famous index “NY Dow”
Widespread index investment among individual investors.
The NY Dow (official name: Dow Jones Industrial Average) is often named because it symbolically represents the US economy.
However, many people do not know much about NY Dow (Dow Jones Industrial Average).
In this issue, we will tell you about the features of NY Dow30 by comparing it with other indexes and looking back on the history of the US economy.
First of all, the index exists mainly to reflect market movements.
There are different types of indexes, such as stocks, bonds, real estate (commodities), and commodities.
The most famous of them is NY Dow, which reflects the movement of the US stock market.
The US stock market, which is the center of the global economy, is listed by the best companies in the world, and NY Dow is attracting the attention of investors around the world as an indicator of the global economy and economic outlook.
NY Dow is 30 carefully selected stocks in the US
Besides NY Dow, there are S&P 500 and Nasdaq Composite Index that are representatives of the US stock market, but there is a big difference between these three indexes.
It is the number of stocks that make up the index.
- S&P 500
- Selected 500 stocks from US companies.
- Nasdaq Composite Index
- Targets all stocks listed on the NASDAQ exchange
- NY Dow
- 30 carefully selected stocks in the US
Despite being a NY Dow consisting of 30 stocks, it includes an element of “selective investment” to represent the broad US stock market.
Among the many companies in the United States, “30 more dense stocks” are carefully selected due to characteristics such as “large market capitalization”, “extremely high reputation as a company”, “interests from many investors” and “sustainable growth”.
History of Dow 30 Average Stock Price
The New York Dow Industrial Stock 30 Class Average Stock Index (NY Dow) was developed by Dow Jones in 1896 as the average stock price of 12 stocks.
Since 1928, it has been the average stock price calculated from the current 30 stocks.
The feature of NY Dow is that it is “30 excellent stocks”.
Generally speaking, the Japanese stock price often refers to the Nikkei Stock Average.
It is said that the Nikkei Stock Average has some bias, but it is still 225 types of average stock indexes.
However, NY Dow, which attracts more attention than the Nikkei 225 in the world stock market, is an average stock index of only 30 stocks.
However, the market capitalization of NY Dow constituents is 7.61 trillion USD (as of December 2018).
By comparison, the market capitalization of all 2109 stocks on the First Section of the Tokyo Stock Exchange is only 3.63 trillion USD, so you can see how huge each company is in NY Dow 30.
Moreover, the calculation method of the index is not the “weighted average” that calculates the component weights by market capitalization, but the “simple average” that simply averages the apparent stock prices.
Therefore, a stock with a large apparent stock price has a higher composition weight than a stock with a large market capitalization.
Difference of Dow 30 and Nasdaq?
In addition to New York Dow 30, the stock index representing the United States is the Nasdaq Composite Index.
The NASDAQ Composite Index is a market capitalization weighted average of all 2634 stocks (as of December 2018) listed on the electronic stock market “NASDAQ”.
The market capitalization is 11.94 trillion USD, which is larger than New York Dow.
To the NASDAQ Composite Index, there is a FAAMG which is named after (Connected with the initials of five companies: Facebook, Amazon, Apple, Microsoft and Google which have a dominant position in the high-tech industry).
Originally, NASDAQ was positioned as an over-the-counter market where small cap stocks are rising, but now it is recognized as a market where major IT high-tech net companies in the US are listed.
For this reason, New York Dow 30 is attracting attention as a leading indicator for the entire stock market, which shows the status of overall US stocks, while the Nasdaq Composite Index is attracting attention as a leading indicator for IT high-tech net stocks around the world.
NY Dow is a barometer of market trends
NY Dow is made up of 30 global companies that represent the world rather than the United States.
Even for people who have never held a stock, there are probably many familiar companies such as IBM, Apple, Coca-Cola, McDonald’s, and Johnson & Johnson.
Most of the NY Dow stocks are multinational companies spanning the globe, and they are expanding their business not only in the United States, but around the world.
In other words, NY Dow 30 is an index that reflects the world economy, not just the US economy, even though it is the average stock index of 30 stocks.
On the contrary, if the stock prices of these companies such as Boeing, Goldman Sachs, 3M, United Health Group, etc., which have a high index composition ratio, further increase, New York Dow is likely to rise.
NY Dow has overcome many crises
NY Dow has a history of more than 120 years, which began in 1896.
The NY Dow has been rising due to the continued long-term growth of the US economy, although it has fallen sharply after these crises.
The market is also said to be a mirror of the “investor’s psychology”.
When the market plunges, it drops too much, but then it appears to rise.
In fact, at the time of the Lehman shock, NY Dow 30 fell by more than 50% from the high price, but it recovered after the economic stimulus measures of each country.
Looking at the history of NY Dow 30 for more than 120 years, we can see that it has “long-term growth” despite the hardships.
It also reflects the benefits of long-term investment.
Even if there was a global depression, a war, or an unprecedented financial shock, the only correct answer to investment at that time was to continue.
Because in each crisis NY Dow 30 got over it and climbed.
Of course, it is necessary to succeed in stock selection in order to continue investment and obtain a return.
That element is in NY Dow 30, that is a careful selection of brands.
We have spun out returns for over 120 years by carefully selecting representative American companies for each era.
The trajectory of NY Dow, which the carefully selected brands weave for over 120 years, is a sign of long-term investment.
Even if there is a crash, it is wasteful to stop investing here, and it seems to be meaningful to continue.
What is the NASDAQ Composite Index?
Nasdaq Composite Index is a leading indicator of emerging markets around the world.
NASDAQ is a stock market for US startups.
The Nasdaq Composite Index is a market capitalization weighted index consisting of all stocks adopted by the Nasdaq National Market Index and the Small Cap Index.
It is calculated with the stock price on February 5, 1971, which is the base date, as 100.
Many high-tech companies such as Apple, Microsoft, Cisco Systems, Google, and internet-related companies are listed on NASDAQ.
And since it boasts the world’s largest market for emerging markets, the trend of the Nasdaq Composite Index is seen not only by high-tech companies in the world and online-related companies, but also as a leading indicator of emerging markets.
It is one of the most important indexes.