What is the Difference Between the NASDAQ and the Dow?

The U.S. stock market is wide and varied given the number of companies and indexes that are available. The Dow Jones Industrial Average and the NASDAQ are the two best known of the indexes, and this article explains how they are different. There are quite a few people who may not know the difference, and they must have a solid understanding of the industry before investing. Comparing and contrasting will help, and the investor will make more money when they know where their money is going.

What Is The Dow?

The Dow Jones Industrial Average is an index of companies that have joined the average to create a number that helps explain the direction of the US economy. The average has been used for years to show how well the economy is performing, and it is often noted in news programs. Those who do not invest or get involved in business often do not know what the numbers mean, and the numbers are simply a combination of the value of all the companies in the index.

What Is The NASDAQ?

The NASDAQ is simply another index that companies may join to add to figures for the industry. Companies that are added to each index are added because they fall into a certain industry, and the NASDAQ has different companies from the Dow. The two diverge as they search for companies they wish to list, and they ask a number of different companies that will add to their profile. They wish to offer a measure that is different from the traditional indexes, and they add every year to ensure their numbers are correct.

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Following The Indexes

Those who follow U.S. stock market indexes must ensure they see the upward trend in the markets over time. They cannot get away from the fact that the indexes will continue to grow as the dollar rises in value, and someone who is investing must check the indexes often to note how well they are performing relative to their investments. The whole of the index may pull a company up or down depending on how it is performing. Someone who is interested in checking every day will glean quite a lot of information from the index numbers.

Which Index To Focus On?

The average investor is not on the U.S. stock market for a particular index, and they will not stay with one or the other for fear that they are missing something. The proper investor is looking for a way to make money that divorced from their feelings or devotions. They wish to choose something that will help them earn money, and they will go from one index to another without a problem. They may lean to one index, but they are not binding all their investments to the Dow or the NASDAQ.

The investors who have goals in-mind must ensure they are looking at places to invest that will serve them well. Someone who is learning about the markets will learn quite a lot when they look into each index, and they will find the range of companies between the Dow and the NASDAQ is quite broad. They will invest in what earns the most, and they will move between indexes as needed.