This is called the index of contents of the book.
It helps you understand what is where and give you a general idea how to read the book.
It's the weekend!
Grab a cup of coffee, in this thread I will explain
1. What is index investing?
2. Why S&P 500, Nasdaq 100 and DIJA are different?
3. How to create your own indexes?
Let's dive right in.
This is called the index of contents of the book.
It helps you understand what is where and give you a general idea how to read the book.
Is it high or is it low?
Is it cheap or is it expensive?
These questions can be answered by looking at the index.
The world created a financial index before cars, airplanes and electricity were the norm!
Stocks in 1896 used to look like this, an index was helpful to understand economy levels
https://t.co/QRfJpURjDP
There can be indexes for the entire economy like Dow Jones & Nifty 50 that have companies from all the various sectors or there can be indexes that track a specific sector.
They all track the overall sentiment and levels.
Without an index, we would have no idea which direction is overall market going at.
The idea is that since these indexes are a basket of stocks handpicked to represent either the economy or the sector in whole, one can buy every company in the index passively and still make money over time.
But, beware! Not all indexes are the same.
This weightage method can have drastic impact on your returns over the long term.
1. Market Cap Weighted
2. Free Float Market Cap Weighted
3. Price Weighted
There are multiple more types, which I won't dwell into. You can read all types at the below link.
https://t.co/wC9RmDY6Uu
Larger the market cap = Larger is the weightage
Smaller the market cap = Smaller is the weightage
Why good?
Cause the index has rules and limits to how big the weightage can be for a single company in the index. This helps in making sure your investment is diversified enough within the basket of stocks.
The main difference between free float market cap and market cap indexes is that unlike market cap weighted indexes, free float indexes do not have an upper limit on the weightage for any one company.
Just 5 companies out of 500 account for 50% of the entire index!
Same problem, larger market cap gets larger weightage.
Top 7 companies out of 50, account for 50% of the index.
In this type of index, price of a stock matters more in deciding the weightage of the stock rather than its market cap.
Weird logic, if you ask me!
Nifty has one for small caps, midcaps, healthcare, financials, you name it!
I hope this thread helped you understand indexes better.
If you find this thread useful then follow me @itsTarH
I write a new thread every weekend.
All my previous work, can be found here.
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Most of the indices are entering oversold territories
Take small cap index for example
Whenever Monthly RSI is below or around 40, the index bottoms out
We are getting there.
If I had 50% cash, I would have deployed some in beaten down stocks where earnings growth is intact. https://t.co/t5WwgH1V5o
Take small cap index for example
Whenever Monthly RSI is below or around 40, the index bottoms out
We are getting there.
If I had 50% cash, I would have deployed some in beaten down stocks where earnings growth is intact. https://t.co/t5WwgH1V5o
I have more than 50% cash but still worried if this is a good time. Will invest 20% by EoY
— Tamil Metaverse (@TamilMetaverse) June 21, 2022
More from Stockslearnings
Read and retweet. One of thr best investors in India who has made multibaggers from various sectors such as seeds, Financials, Auto Ancs, Real estate, Chemicals, Pharma,Technical textiles, Animal health etc. Uniquest and most realistic+diverse approach in my view @SamitVartak
Compelled to take down notes from this very interesting talk by @SamitVartak and share with the Investing community. Was introduced to this gentleman by @ishmohit1 - Thanks !!https://t.co/bCfjfNBWO1
— Mouzam (@mmali09) July 18, 2021
Highly recommended to watch it.
\u267b\ufe0fRetweet to if you find my notes useful https://t.co/3zZ9qCf90z pic.twitter.com/LGjoJDaJsT
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In the spring and summer of 2016, as reported by the Times, activity we traced to GRU was reported to the FBI. This was the standard model of interaction companies used for nation-state attacks against likely US targeted.
In the Spring of 2017, after a deep dive into the Fake News phenomena, the security team wanted to publish an update that covered what we had learned. At this point, we didn’t have any advertising content or the big IRA cluster, but we did know about the GRU model.
This report when through dozens of edits as different equities were represented. I did not have any meetings with Sheryl on the paper, but I can’t speak to whether she was in the loop with my higher-ups.
In the end, the difficult question of attribution was settled by us pointing to the DNI report instead of saying Russia or GRU directly. In my pre-briefs with members of Congress, I made it clear that we believed this action was GRU.
The story doesn\u2019t say you were told not to... it says you did so without approval and they tried to obfuscate what you found. Is that true?
— Sarah Frier (@sarahfrier) November 15, 2018
In the spring and summer of 2016, as reported by the Times, activity we traced to GRU was reported to the FBI. This was the standard model of interaction companies used for nation-state attacks against likely US targeted.
In the Spring of 2017, after a deep dive into the Fake News phenomena, the security team wanted to publish an update that covered what we had learned. At this point, we didn’t have any advertising content or the big IRA cluster, but we did know about the GRU model.
This report when through dozens of edits as different equities were represented. I did not have any meetings with Sheryl on the paper, but I can’t speak to whether she was in the loop with my higher-ups.
In the end, the difficult question of attribution was settled by us pointing to the DNI report instead of saying Russia or GRU directly. In my pre-briefs with members of Congress, I made it clear that we believed this action was GRU.
