Regardless of what you know about the financial world, I’d be surprised if you haven’t heard of the S&P 500. It is yet another institution that helps you deal with money & markets. Similar to other indexes, it follows 500 of the largest publicly traded stocks in the US. As you can well imagine, following 500 companies probably means it represents a widely diverse group of industries. S&P stands for Standard and Poor’s which is a division of McGraw Hill which you have probably heard of. Every company that is included in the S&P 500 is either trades in the New York Stock Exchange or the NASDAQ. These companies are also leaders in their particular industry so they typically are well-known names.
Some of the companies that are well recognized include: Adobe Systems, Aetna, Allstate, Best Buy, Campbell Soup, Capital One Financial, Cisco Systems, Dell Inc., Delta Airlines, Dollar General, Expedia Inc., Ford Motor, Goldman Sachs Group, Hewlett-Packard, Kellogg Co., Macy’s Inc., Nordstrom, PepsiCo Inc., Starbucks, Target, United Parcel Service, Visa Inc., Whole Foods Market, Xerox Corp., Yahoo, and Zions Bancorp just to name a select few. These companies are selected for inclusion in the S&P 500 by what is known as the S&P Index Committee. Most companies are American based, but there are some international companies as well. Going forward it is important to note that only American based companies will be considered for inclusion. It is weighted so a company that is worth more has more weight applied to its stock. Keep in mind that if you want to invest in this there are two main ways.
First of all, you as an investor can buy individual shares. The other way is that you can purchase shares of an ETF or exchange-traded fund. So is the S&P 500 a good market indicator the general public can trust as a good source when looking to invest? Yes, the S&P 500 has been regarded as the single best gauge of the equities market. Many people refer to the S&P 500 when looking to gauge the health of the stock market since each stock on the list has been carefully considered for inclusion by the committee I discussed earlier. This can be a great foundation for growing and building your investment portfolio. Make sure before you make any financial investment that you get investment tips from a professional or someone who has a lot of experience in the market. Speak to a financial advisor, or look for online information from reputable experts in the field. One option is to look into short selling.
This allows investors to still make money when a stock price falls. This requires borrowing so there are some conditions that the investor has to meet. Those who participate in short selling are seen as more sophisticated investors than your average investor. Some companies short sellers have recently capitalized on are: Cerner Corporation, JC Penny Company, Best Buy Co., Teradata Corporation, Nicor Inc., Quest Diagnostics Inc., AutoNation Inc. and Tyson Foods Inc. However keep in mind that with an increase of short selling individuals believe that the names will drop in value accordingly.