The big losses of the biggest
companies can swing the market
indexes to look like the whole
market is in trouble when actually
the true story is quite different.
If the big company’s stock price
is falling, then investors are
losing a lot of money, because the
bulk of investment dollars, about
80%, are tied up in these stocks,
mostly through institutional
investments and mutual funds.
Here is an example of what the
market can really be doing:
In 2001, the Dow, the Nasdaq, and
the S&P 500 were all down. But the
average Nasdaq stock was up 15%. The
average NYSE stock was up 7%. It was
the large-cap companies whose stock
was in trouble.
|
Market cap |
up/down% |
|
Over $59 billion |
-17.7% |
|
$27-59 |
-5.9% |
|
$16-27 |
-.7% |
|
$11-16 |
+18.4% |
|
$ 8-11 |
+3.4% |
|
$ 6- 8 |
+9.8% |
|
$ 5- 6 |
+31.1% |
|
$ 3- 5 |
+22.6% |
|
$ 2- 3 |
+21.1% |
|
under $ 2 billion |
+13.8% |
The large-cap companies that
drive the index numbers up or down,
were losing money. But the mid-cap
companies did really well, and the
S&P 400 mid-cap index that year
reflected this.
Other Stock Market Basics Topics:
-
Stock Market Investing – the
Right Way
-
More Stock Marketing Investing
-
How to Pick Winning Stocks
-
The Golden Rule of Investing
-
Avoid Psychological Traps to
Have Successful Investing
-
Changes in Stock Values Can Be
Big Numbers
-
How to Invest Smart
-
Stock Advice - Important Selling
Rules
-
Poor Stock Buying Decisions
-
Market Indicators
-
Stock Market Cycles
- When a bear stock market may
not be a bear market
-
Stock Index Futures
-
Four Things that Affect Stock
Valuation
-
What is a P/E ratio?
-
Value Investing
-
Cheap Stocks
-
What is a Financial Statement?
-
Analyzing Financial Statements
-
Stock Market Tip - Red Flags to
Look For When Investing?
-
The Annual Report – How to Read
-
Stock Market Analysts – Stock
Market Advice and Tips
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