Name: Stock Market Index Definition (BEGINNER FRIENDLY EXPLANATION!)
Uploaded: 2020-03-12T08:02:04.000Z
Duration: 7 min 15 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

there's a lot of stock market indexes out there and you've

Adverbs of manner

Probably either heard about them in the news or heard somebody talk about them at some point and just kind of felt a little

Confused and didn't really want to ask because you think everyone knows what it is. If you're not sure what a stock market index is

And you kind of want to know how they work then you've definitely landed on the right video.

So if you want to learn more about things like: the nine major stock market indexes that all

investors need to know about, what goes into the calculation of an index and

Most importantly how you can use stock market indexes to make money, then... keep watching! Stock market indexes are nothing more than a mathematical

Average that quickly tells you how the stock market is doing

I think we over complicate things in our mind

Especially when it's related to finance and investing, but I guarantee all of you are already familiar with indexes

For example, if you and 10 of your friends each weighed yourselves and you calculated the average weight of the entire group

That would be an index. And as your weights changed the index would change too. Anything

That's a calculated average of many different components

can be considered in index. The S&P 500, which is the most widely used stock market index is the average of the

500 largest US companies all rolled up into one easy to read average price. The level of the S&P 500 index is

Expressed as points the S&P is up 10 points. It's down 10 points. For example. The real time calculation of stock market indexes is a

complimentary service provided by major financial data companies. The name S&P 500 comes from Standard & Poor's the

Company that officially created the index. And obviously the 500 part of the name comes from the 500 components in the index

Although there's a lot more than 500 stocks in the US

There's actually over 4,000 the S&P 500 is a pretty accurate barometer of how the overall US stock market is doing

Influential companies are part of the S&P 500 index. In the US when you hear people say the market is up today

They're probably referring to the S&P 500

not because S&P 500 index is the market but because the index is a

Representative chunk of the market. Other countries have their own stock market indexes. Japan has the Nikkei 225,

Brazil has the Ibovespa, the UK has the FTSE 100, and in Germany

there's the DAX, in Korea and there's also the Kospi and so on and so forth. Just flip to the back of the

And you'll find a comprehensive list of all the countries and their stock market indexes

If you want to know how the economy of a particular country is doing

You can just look at the stock market index for that country. Stock market growth and decline

Often goes hand-in-hand with economic growth and decline

Venezuela's economy has been falling apart under the regime of Nicolas Maduro and it shows in its stock market performance

Venezuela's stock market index the IBVC has gone down by 94 percent last year

There are nine major indexes that all investors need to know about. Following these indexes

Will keep you informed about the economy and as a result, help you make smarter decisions with your money

Oh, and if you're liking this video so far go ahead and give this video a thumbs up. Okay

so here are the top 9 indexes you need to know about. US corporations are very

International and they play such a big role in global markets

So the S&P 500 is the most followed stock market index in the world

Then there's the Dow which is short for Dow Jones Industrial Average

And the Dow is made up of the 30 largest companies in the US

personally, I think the Dow is a bit redundant because it's 30 components and those are already included in the S&P 500 index but a

Lot of people like to look at it as a very pure indicator of how the US stock market is doing.

There's also the Nasdaq which consists of over

3,000 stocks and has a heavy bias towards technology companies. If you're outside of the US

You'd want to follow the main stock market index in your country. For a more global perspective

The MSCI World Index covers all the major stocks across 23 developed countries

So this is often used as a barometer of the world economy as a whole.

There's also the MSCI Emerging Markets Index, which covers the stock markets across 24 emerging market countries

So countries like Brazil China and India are all in this index

There are indexes for everything not just stock markets the S&P

GSCI Commodity Index tracks commodities like oil gold

silver soybeans corn cotton wheat and even cattle

So if you want to know how a certain asset class has performed over the last few years

You can just look up the most widely used index for that asset class

For example for a quick snapshot of real estate. You can look up the Dow Jones Real Estate Index

The Dollar Index is another super important index that tells you how strong the US dollar is

Relative to other major currencies like the Euro Pound Japanese yen and Canadian dollar. Last but not least

Also known as the fear index. The VIX gauges the level of fear present in the stock market by tracking the price levels of options

used as insurance against disaster. When the financial crisis happened in

2008 the VIX spikes from eighteen to seventy nine, and the S&P500

Dropped 20% over the same period when the level of fear in the market

Rises the VIX also rises. So far we've covered what stock market indexes are how they work which ones you should know about. Now

Let's talk about how you can use stock market indexes to make money as great as they are

Index or any of the ones that we've talked about actually. That's because an index is just a mathematical average

Published by a financial data company. So although you can't invest in an index because that doesn't make sense

you can't invest in just something that's a

Calculation, you can invest in an index fund. An index fund is an investment vehicle that mirrors in index

You can invest in an S&P 500 index fund such as the Fidelity

500 index fund this would immediately make you a part owner in all 500 companies in the index. If the S&P 500 index goes up

5% your investment in the index fund also goes up 5%. And of course the opposite is also true

Your investment in the index fund also goes down 5%. If you don't know how to pick stocks then index funds are a great way

To get started. Investing in index funds is a convenient way to basically own a piece of the entire economy in S&P 500 index fund

Will have a lot of stocks in retail, construction, technology, health care, and a whole bunch of other industries

So when you're just getting started with investing you have to decide whether you want to take a passive approach to investing and just buy

Index funds or if you want to take the active approach

And learn how to select individual stocks. For more beginner friendly info on stock investing

make sure you also check out these two videos here and

If you're new to the channel hit that subscribe button for new videos every week. Always remember to go after your dreams

unapologetically and to live life on your terms