A group of securities whose overall value is determined by giving equal weight to each security’s performance rather than weighting by other factors like its market weight (think Nasdaq 100) or price weight (the Dow Jones).
It’s nothing more than a straight-up, vanilla average of the performance of all the securities in the index. Like if we have in our index 1,000 shares of GE at $15 and 2,000 shares of MO at $58 and 5,000 shares of AAPL at $200, even though the weighted average in the index of AAPL is way more than the other stocks in there, the arithmetic index ignores the weighting. It just takes the plain jane average of 15, 58, and 200 and reports what the arithmetic mean index did.
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Finance: What is the S&P 500?45 Views
finance a la shmoop. what is the S&P 500? well the S&P 500 is just an index- that
is the standard and poors company assembled 500 stocks put them on a
spreadsheet- this was a spreadsheet in 1957 -and they tracked them. [spreadsheet pictured]
well the index had something like 37 shares of Procter & Gamble, the 23 shares
of Ford, 18 shares of IBM and so on. in the 1950s the S&P 500 totaled something
like 40 maybe 50 bucks on a good day. at the end of each day the elves who worked
inside of the S&P Factory, they would add up the shares basically ignore any
dividends and send to the press a total which was published to more or less
everyone who cared about investing. well not nearly even a century later the 40 [man reads newspaper]
to $50 reign to the SNP is today knock on the door of 2,500 .so without even
having dividends reinvested you'd have made 50 times your money with dividends
reinvested to buy more shares instead of keeping the cash to buy you know
groceries or electric massage slippers. you'd have made over 70 times your [grocery display case and slippers pictured]
original investment. welcome to America.
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