What is the Difference Between the Nasdaq & the Dow?

What is the Difference Between the Nasdaq & the Dow?

Understanding the Difference Between the Nasdaq and the Dow

The Dow and the Nasdaq are the shortened names of two index products used to track the overall performance of the major Wall Street stock markets. The Dow Jones Industrial Average, more commonly known as the Dow or the DJIA, is the second oldest stock market index on Wall Street, dating back to the late 19th century. The Nasdaq refers to the NASDAQ Composite, which dates back to 1985, and it differs from the Dow in terms of the stocks it tracks.

The Dow is the most often cited benchmark index around the world. Nearly every financial news publication reports on the daily value of the Dow, and that value represents the price of one share for each of the 30 companies it tracks. The Nasdaq tracks all the companies listed on the National Association of Security Dealers Automated Quotation system, which is the second most important stock exchange in the world after the New York Stock Exchange. Since the Nasdaq tracks far more stocks than the Dow, the value is represented in a logarithmic scale for ease of comprehension.

The Big Three of Wall Street

Along with the S&P 500, the Dow and the Nasdaq are considered to provide a pulse of what is happening on Wall Street; they are called the Big Three of the financial world, and they serve as a temperature gauge of the stock market.

Investors, traders, analysts, economists, and policymakers pay close attention to the Big Three because they offer a glimpse into the behavior of market participants. If the Big Three show gains three days in a row, international investors will respond accordingly, thus creating a sense of optimism and driving up the value of foreign stock exchanges in London, Frankfurt, Tokyo, Shanghai, and other major financial centers.

Tracking Criteria

One of the reasons the Dow is more closely followed than the Nasdaq is that its 30 components have come to represent the triumph of companies that focus on passing value onto shareholders. As of August 2018, some of these companies included: Apple, Boeing, ExxonMobil, JPMorgan Chase, Microsoft, Nike, Walmart, the Walt Disney Company, and 22 others. At one point, only stocks traded on the New York Stock Exchange were part of the Dow; these days, they also include companies listed on the Nasdaq. The selection of Dow components is determined by a committee, and these choices become blue chip stocks.

There is an inherently American economic success story built into the Dow, but it is also a story of pure capitalism. Once a stock no longer fits the Dow blue chip criteria, it is replaced; such has been the case with AT&T, AIG and General Electric.

As a composite index, the Nasdaq is heavily represented by technology companies. Microsoft, for example, is listed on both indices. In essence, the Nasdaq represents about half of the stocks that trade on Wall Street; its high technology volume made this index skyrocket during the Dot-Com Bubble period of the late 1990s.

Both Dow and Nasdaq are used by investment banking firms and portfolio managers to offer financial products such as index and exchange-traded funds. Investors looking for an easy way to diversify their portfolios can take advantage of these index-based products since they are easy to acquire, understand and follow.

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The History of the NASDAQ

The History of the NASDAQ

About NASDAQ

The National Association of Securities Dealers Automated Quotations, or NASDAQ, is an American stock-exchange that is the second largest exchange and the largest electronic stock market in the world. There are currently about 3,200 publicly traded companies listed on the exchange. The NASDAQ is located within New York City and uses the United States Dollar as its currency. There are certain specifications a company must meet to be listed on the NASDAQ. Companies must maintain a stock price of one dollar or greater in addition to a total value of outstanding stocks of $1.1 million to have their listing included. Unlike other stock markets, there is no trading floor and all exchanges are completed electronically. The NASDAQ Stock Exchange is owned and operated by Nasdaq, Inc., a multi-national financial services corporation that also owns and operates eight European stock exchanges.

NASDAQ Beginnings

The NASDAQ was founded in 1971 by the National Association of Securities Dealers and began trading on February 8, 1971 as the world’s first electronic stock market. In its beginnings, the NASDAQ was a quotation system and unpopular with brokerages that made their money on the spread. Initially, these exchanges were completed through a computer bulletin board and over the telephone. The NASDAQ was a major market of over-the-counter (OTC) securities trading and eventually assumed the label OTC in the media, as well as in Standard & Poor’s issued guides.
The NASDAQ stock market company has attracted the involvement of tech giants such as Apple, Microsoft, Oracle, and Dell with its introduction to the United States of online trading. Another contribution attributed to the NASDAQ has been the modernization of the IPO, or Initial Public Offering. In 1987, the National Association of Securities Dealers separated from the NASDAQ.

Recent History

The NASDAQ Stock Market created another “first” by merging with the London Stock Exchange in 1992 to create the first intercontinental link of securities markets. However, the NASDAQ is most commonly associated with attracting the large tech companies in their infancy in the early 1990’s during the dot-com boom. In early 2000, the index peaked at over 4,500 and then sunk by 80% two years later due to the burst of the dot-com bubble. The NASDAQ stock market status was changed to a licensed national securities exchange in 2006 and, in 2007, Nasdaq created a merger with a Nordic based exchange operator, OMX. The formerly known Nasdaq became the NASDAQ OMX Group.

On the eve of the United Nations Conference on Sustainable Development in 2012, NASDAQ OMX founded the United Nations Sustainable Stock Exchanges Initiative, which encourages sustainable investments and corporate sustainability. The company continues to follow its pattern of corporate trailblazing when, in 2016, Nasdaq promoted its Chief Operating Officer Adena Friedman to Chief Executive Officer, making her the first woman to run a major exchange in the United States.

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How Do Penny Stocks Work

How Do Penny Stocks Work

You’ve probably heard at least one story about an investor making a large profit investing in a penny stock that doubled or tripled in value. They can seem like the perfect bet, assuming you can strike gold buying the right one of them.

What Are Penny Stocks?

The term “penny stock” usually refers to stocks that are priced under $1, although the SEC considers any stock under $5 to be in this category. Investing in penny stocks is risky because there are reasons why they are priced so low. They may be companies that are nearing bankruptcy or have unproven products. Thus, it’s a gamble to guess which one will recover and become more valuable in the future. They’re also low volume, illiquid assets, meaning that it can be hard to sell them to someone else if they don’t turn out to be a good investment.

How Do You Invest in Penny Stocks?

Penny stocks trade like other stocks, though they usually are not listed on major exchanges. The difference with these assets from well-known stocks is their low volume and susceptibility to price manipulation. This makes them riskier to trade because you can wake up to unpleasant surprises. They are also regulated more closely by the SEC to catch investor fraud.

The positive side of penny stocks is that they require a much lower initial investment compared to mainstream stocks. It’s possible to choose a basket of them and make a profit if a couple recover in price. If you’re willing to risk the capital to invest in them, they can pay off.

Things to Know Before Investing in Penny Stocks

Here’s a run down of the risks you’ll need to keep in mind when considering penny stock investments:

– High Risk: These stocks may never recover from the problems that have caused their price to drop below $1. They may go bankrupt and stop trading.

– Low Market Captitalization: These stocks are sometimes called micro-cap because they are low priced and don’t have a large number of shares in circulation.

– Less Information Available: It can be difficult to research these stocks and judge their fundamentals properly. Sometimes you only have market gossip to work with.

– Low Volume: These stocks have been abandoned by most investors, so there’s little interest in trading them. This can cause high price volatility, and it can be difficult to exit a position.

– Price Manipulation: Low volume and high volatility trading makes these stocks targets for price manipulators. Sometimes a stock will be “pumped” with media buzz to make its price rise for a short-term gain.

– Regulators Watch Them: The SEC will sometimes intervene when a penny stock exhibits tell-tale signs of price manipulation. If trading is halted, you may get stuck in a position.

– Lack of History: Some penny stocks are new companies that have yet to prove a product or revenue stream. The market is waiting to see if they’ll establish themselves or fail early on.

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Five Of The Most Promising Publicly Traded Marijuana Stocks

Five Of The Most Promising Publicly Traded Marijuana Stocks

The opinion of many in the industry is that the performance of many marijuana stocks was less positive than expected so far in 2018. Despite this fact, the interest among investors in these stocks is still on the rise.

The reason for this interest is simple to discern. Marijuana stocks possess more potential for growth than most vehicles for investment available to the market.

The following is a quick rundown of five publicly traded marijuana companies for investors in the United States and Canada to consider.

Abattis Bioceuticals Corp

Abattis Bioceuticals is headquartered in Vancouver, B.C. and provides growers with essentials like consulting services, extraction equipment, and cultivation systems. The company was able to raise more than $3 million dollars in 2018 and used a portion of this money to fund a spree of acquisitions. In recent months, Abattis Bioceuticals has acquired fertilizer formulas, a controlling interest in a testing lab for marijuana, and a sizable stake in a company that processes payments.

Novus Acquisition & Development

Novus is a consulting firm that bases its operations in Miami and provides clients that use cannabis as an alternative medical treatment with a savings plan to lessen the cost of treatments.

Clients of Novus pay less than $20 a month to receive substantial discounts on the cost of filling their marijuana prescriptions. A month ago, Novus announced that its Medplan benefits network is immediately available in all states where marijuana use for medical conditions is allowable.

Novus has also hired TKO Organics to grow and dispense the marijuana to be used by Novus clients.

Cannabis Sativa Inc.

Cannabis Sativa is a maker of products and has recently purchased the Kush firm. Kush concentrates its efforts on marijuana research. The former Governor of New Mexico, Gary Johnson, has been tabbed to be the President and Chief Executive Officer of the company that is now formed as a result of the merger.

Products from Cannabis Sativa are marketed under the name ‘hi’ and the company’s ‘hi lozenges’ are a favorite among customers.

United Cannabis Corp.

United Cannabis has been providing consulting services for companies in the medical marijuana industry since California prescriptions for medical marijuana first became legal in 1999. UC is currently looking to obtain a patent for an extra strength marijuana tablet that the company has produced.

The firm, which is based in Denver, has also obtained a consulting job with the government of Jamaica. The nation is currently deliberating over the pros and cons of decriminalization of marijuana in the country.

Greengro Technologies

Greengro is located in Anaheim, California and was able to raise $875,000 through a private placement in March. The company also purchased Vertical Hydrogarden and reopened the retail location in the month of March. The move is the first of a proposed plan to open a chain of stores.

Greengro is also currently involved in the process of a multi-stage acquisition of a construction company that will be used for future expansion.

Final Thoughts

So far this year, the wildest expectations of some who may have viewed marijuana stocks as a fast track to tremendous wealth have not been realized. However, the five companies listed above, as well as many others in the industry, have shown the performance and possess the growth potential to suggest that the optimism remaining among investors is justified.

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5 Things You Need To Know About Robinhood

5 Things You Need To Know About Robinhood

Of the many investing apps out there, Robinhood appears to be the most promising one. Launched in 2013 by Vladimir Tenev and Baiju Bhatt, Robinhood has quickly amassed a large following of everyday investors who are looking to make money with their extra cash. But before you deposit money into the app, perhaps you want to know more about what Robinhood can offer. Here are five things you should know:

Robinhood is Free

Just like the legendary heroic outlaw whom the app was named, Robinhood doesn’t take a cut of the cash. Rather than having you pay upwards of $16 for a roundtrip trade like how TD Ameritrade and similar brokers do, Robinhood is completely free of charge. You won’t have to worry about commissions eating up your investing capital. In fact, Robinhood even has a referral program that rewards free stocks in legit companies.

Robinhood Offers Longer Trading Hours

To stay true to their goal of providing the best financial product to their customer base, Robinhood allows extended hours of trading on all account tiers. You don’t even have to sign up for their Gold membership to be able to trade during the pre and post market hours. Standard U.S. market trading starts at 9:30 AM EST and ends at 4:00PM EST. But with Robinhood, you can buy and sell your favorite stocks from 9 AM to 6 PM EST, thus allowing you to profit from earnings announcements and any activity in foreign markets.

Robinhood Offers Crypto Trading

This is a fairly new offering by Robinhood, and several states in the U.S. are still prohibited from trading cryptocurrencies via the platform. Nonetheless, it serves as a testament to how fast the platform is growing. Currently, only users in select states including California, Florida, and Colorado are allowed to trade the big three in cryptos, namely Bitcoin, Ethereum, and Litecoin.

Robinhood is Completely Mobile

Unlike most investing apps that work both in desktop and mobile devices, Robinhood is purely mobile. If you’re looking for an investing app that you can check on your desktop, then Robinhood isn’t for you. However, if you are okay with checking stock prices and earnings reports on your smartphone, then download Robinhood.

Robinhood has a Premium Tier Account

Of course, as with any tech starutps, Robinhood needs money to survive. This is where Robinhood Gold comes into play. Robinhood Gold is a premium margin account with a lot of extra features that basic account tier doesn’t have access to. For instance, it has Gold Buying Power, which refers to money that the company lends its users to buy stocks in the financial market. Keep in mind, however, that users who are borrowing more than $50,000 are charged with an annual percentage rate of five percent.

Times are changing, and so should your investing approach. With tools, like Robinhood, you can maximize buying power and returns on investment without increasing risk. in addition, it’s a convenient tool for monitoring your portfolio and executing orders on the go.

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Penny Stock Trading Apps

Penny Stock Trading Apps

You’ve decided to try your hand at penny stocks. You know the risks and have (hopefully) practiced with trading “papers.” And now you’re looking for a platform for trading.

Many investors today have moved to trading via apps rather than looking to traditional brokers as in days past. Many conventional brokers now even offer their own apps to make trading easier. And apps like Robinhood that allow trading without being connected to a broker are becoming more and more common.

Unfortunately, due to the lack of regulation and extremely high-risk nature of penny stocks, many brokers blacklist them, so finding a platform to buy or sell penny stocks can be challenging.

And those brokers that do allow investors to trade penny stocks usually charge extra fees for the service.
As of today, only apps offered by traditional brokers allow for trading these highly volatile stocks. Apps that offer free trades, like Robinhood, haven’t jumped on the penny stock bandwagon yet.

Below is a list of brokers that offer investors the ability to trade penny stocks.

• TD Ameritrade
• Fidelity
• Charles Schwab
• Interactive Brokers
• Ally
• Trade Station
• E*Trade

You should evaluate each broker carefully before deciding which is best suited to your needs. Some of them offer fees based on the dollar amount of the trade, and others offer flat fees per trade. Some will charge premium rates or apply extra fees to penny stocks. You may even decide that you need a separate broker for your penny stock trades than your other investments in order to get the best possible rates.

Whatever you decide, remember the stock market is speculative and volatile, and investing in penny stocks compounds your risk exponentially.

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