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| Some Definitions about Day-Trading / Part 4 |
| About INDICES ! |
| NASDAQ COMPOSITE |
Overview
The Nasdaq Composite is a broad market index that encompasses about 4,000 issues traded on the Nasdaq National Market. The index first started in February of
1971 with a base value of 100.00. Though it is not as actively traded as its much smaller cousin, the Nasdaq 100, this index is more commonly referred to by
investors and the financial press. When the question “How did the Nasdaq do today?” is asked, the answer is usually the value of this index.
Composition
The Nasdaq Composite Index is comprised of virtually every firm that trades on the exchange. The index is calculated based on a market cap weighting, meaning that
the largest firms have the greatest impact on the index's value. The top 10 stocks in the index account for greater than 30% of the Nasdaq Composite's value--a truly
remarkable statistic given that the index contains roughly 4,000 firms. Microsoft (MSFT) alone comprises about 9% of the index.
The Nasdaq Composite is a broad market index that encompasses about 4,000 issues traded on the Nasdaq National Market. The index first started in February of
1971 with a base value of 100.00. Though it is not as actively traded as its much smaller cousin, the Nasdaq 100, this index is more commonly referred to by
investors and the financial press. When the question “How did the Nasdaq do today?” is asked, the answer is usually the value of this index.
Composition
The Nasdaq Composite Index is comprised of virtually every firm that trades on the exchange. The index is calculated based on a market cap weighting, meaning that
the largest firms have the greatest impact on the index's value. The top 10 stocks in the index account for greater than 30% of the Nasdaq Composite's value--a truly
remarkable statistic given that the index contains roughly 4,000 firms. Microsoft (MSFT) alone comprises about 9% of the index.
Microsoft -- MSFT-- 9 %
Intel -- INTC -- 5.9 %
Cisco Systems -- CSCO -- 5.4 %
Dell -- DELL -- 2.9 %
Amgen -- AMGN -- 2.5 %
Oracle -- ORCL -- 2.1 %
Qualcomm -- QCOM -- 1.8 %
eBay -- EBAY -- 1.5 %
Comcast -- CMCSA -- 1.3 %
Amat -- AMAT -- 1.2 %
Intel -- INTC -- 5.9 %
Cisco Systems -- CSCO -- 5.4 %
Dell -- DELL -- 2.9 %
Amgen -- AMGN -- 2.5 %
Oracle -- ORCL -- 2.1 %
Qualcomm -- QCOM -- 1.8 %
eBay -- EBAY -- 1.5 %
Comcast -- CMCSA -- 1.3 %
Amat -- AMAT -- 1.2 %
Positives
The Nasdaq Composite is one of the premier indices in the world. Because technology firms account for roughly 2/3 of the index, investors often use the Nasdaq
as a guide to help them determine the strength of technology stocks.
Drawbacks
In September 2003 Fidelity Investments introduced the Fidelity Nasdaq Composite Index Fund (symbol ONEQ)--an exchange-traded fund that tracks the
performance of this index. Much like any other ETF, investors can easily buy and sell this fund during the day. In addition, the fund carries a small 0.30% expense
ratio. However, it has not yet gained the popularity of the QQQ (an ETF that tracks the Nasdaq 100 Index), so liquidity may be more of an issue if you're attempting to
trade this fund. And because it is more diversified, volatility should be slightly lower than that of QQQ. In general, because QQQ has a lower expense ratio and
higher liquidity, most investors choose to trade that fund as opposed to ONEQ.
How can I trade/invest in this index ?
In September 2003 Fidelity Investments introduced the Fidelity Nasdaq Composite Index Fund (symbol ONEQ)--an exchange-traded fund that tracks the
performance of this index. Much like any other ETF, investors can easily buy and sell this fund during the day. In addition, the fund carries a small 0.30% expense
ratio. However, it has not yet gained the popularity of the QQQ (an ETF that tracks the Nasdaq 100 Index), so liquidity may be more of an issue if you're attempting to
trade this fund. And because it is more diversified, volatility should be slightly lower than that of QQQQ. In general, because QQQQ has a lower expense ratio and
higher liquidity, most investors choose to trade that fund as opposed to ONEQ.
The Nasdaq Composite is one of the premier indices in the world. Because technology firms account for roughly 2/3 of the index, investors often use the Nasdaq
as a guide to help them determine the strength of technology stocks.
Drawbacks
In September 2003 Fidelity Investments introduced the Fidelity Nasdaq Composite Index Fund (symbol ONEQ)--an exchange-traded fund that tracks the
performance of this index. Much like any other ETF, investors can easily buy and sell this fund during the day. In addition, the fund carries a small 0.30% expense
ratio. However, it has not yet gained the popularity of the QQQ (an ETF that tracks the Nasdaq 100 Index), so liquidity may be more of an issue if you're attempting to
trade this fund. And because it is more diversified, volatility should be slightly lower than that of QQQ. In general, because QQQ has a lower expense ratio and
higher liquidity, most investors choose to trade that fund as opposed to ONEQ.
How can I trade/invest in this index ?
In September 2003 Fidelity Investments introduced the Fidelity Nasdaq Composite Index Fund (symbol ONEQ)--an exchange-traded fund that tracks the
performance of this index. Much like any other ETF, investors can easily buy and sell this fund during the day. In addition, the fund carries a small 0.30% expense
ratio. However, it has not yet gained the popularity of the QQQ (an ETF that tracks the Nasdaq 100 Index), so liquidity may be more of an issue if you're attempting to
trade this fund. And because it is more diversified, volatility should be slightly lower than that of QQQQ. In general, because QQQQ has a lower expense ratio and
higher liquidity, most investors choose to trade that fund as opposed to ONEQ.
E-Mail : Herman.Bogaerts@Wanadoo.fr --- Herman_Bogaerts@Yahoo.com
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