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| Course 104:
Understanding Market Indexes |
| Other Indexes |
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While the Dow and the S&P are the most famous measuring sticks for the market's performance, there are literally hundreds of indexes in existence. There's the Nasdaq Composite, which measures the performance of over 4,000 stocks that trade on the Nasdaq exchange. Another famous index is the Wilshire 5000 Total Market Index, which strives to benchmark the entire market by measuring the performance of roughly 5,700 American stocks. Other indexes measure the performance of stock markets in a given foreign country, such as the Japanese Nikkei or the German DAX.
At Morningstar, we've recently rolled out our own way of looking at the market's performance. Based on the same methodology as the well-known Morningstar Style Box™, Morningstar's 16 indexes can quickly give an idea of what kind of stocks are driving the market.
The bottom line is that there are multiple tools available to gauge the market's sentiment and performance. Plus, if you are putting money into an investment that mirrors an index's performance, it's a good idea to understand what the index is intended to track and how it is calculated. Next:
The Quiz
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