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.


The History of the NASDAQ

The History of the 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.


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.


How to Invest in Penny Stocks

How to Invest in Penny Stocks

The term “penny stocks” traditionally referred to stocks which traded for under a dollar, on the over-the-counter market, typically referred to as pink-sheets. Nowadays, however, penny stocks can mean anything trading under five dollars, including stocks which trade on the major exchanges.

For the sake of this article, the term penny stock will be applied traditionally – to stocks not traded on the exchanges. The reason is because these are the stocks which carry the most risk, and therefore the potential for the most reward – which is what investors interested in penny stocks are typically looking for.

Many experienced investors avoid penny stocks due to the extreme volatility and risk associated with them, but there are those who seek out penny stocks for the possibility of huge returns, and even some who just enjoy the rush of uncertainty trading penny stocks provides.

While dabbling in penny stocks should only be attempted by experienced investors, if you decide you want to take on the risk, you should learn as much as you can to help you avoid common mistakes.

One way to do this is to practice with one of the many platforms that allow you to trade penny stocks “on paper.” These platforms allow you to make trades, just as you would with a real investment, but without actually spending any money. This way you can see what your trades would have done had they been “real.”

These platforms allow you to practice with no risk and to get a sense of the volatility of penny stocks and the risk vs. reward.

Penny stocks are the most speculative, most volatile stocks available. They are typically offered by small, new companies with little to no record to back them or by failing companies who have been delisted by the major exchanges.

However, many of today’s large blue-chip stocks started out as penny stocks. This potential to make it big on a new company leads many investors to take the risk. The problem is that there is no way to know which companies will become successes and which will fizzle out, taking your investment with them.

So why do some investors find penny stocks so attractive? The low cost allows average investors the opportunity to purchase large quantities of stock, something they can’t afford to do with more established companies. That way, if the price goes up, even by a few cents, investors stand to make a good return. On the flip side, if the price goes down, even by a few cents, the loss can be significant.

Investing in any stock carries risk, but penny stocks carry the highest risk of all. If you decide to invest in penny stocks, be sure to do your homework and practice trading “papers” before putting your own cash on the line.


What is Shorting a Stock?

What is Shorting a Stock?

If you’re at all familiar with the stock market or you’ve spent any time around investors, you’ve most likely heard the term shorting, or short-selling. And you may even have some idea what it’s all about. But most average investors have a vague notion of shorting at best. If that sounds like you, read on.

Shorting, or short-selling, refers to the act of selling a stock that you do not own, based on the prediction that the stock’s price will drop and you can make money on the difference between the price at which you sell the stock and the price you pay for the stock.

Consider the following example:

You think the price for stock XYZ will drop in the near future, so you borrow one share of that stock. You then sell that stock for the current market price of $100. Two days later, the price does indeed drop to $80 per share. You then buy one share for the current price of $80 and return it to wherever you borrowed it from, making a profit of $20.

This potential for profit is what motivates investors to short.

But short-selling is extremely risky because the potential loss is limitless as there is no way to accurately predict what a stock price will do.

Consider this alternative example:

Same scenario as above, you borrow one share of stock XYZ which is currently trading at $100 per share. Believing the price will drop, you are hoping to make a profit by shorting it. But, after you’ve sold the share you borrowed at $100, the stock price goes up. If you’re lucky, it only goes up to, say, $120. So instead of a $20 profit, you take a $20 loss. Now imagine you shorted 100 or 1,000 shares – that loss is significant. Now imagine the price went up to $200 per share. Since there is no limit to how high a stock can jump, there is no limit to the potential loss you could absorb when you short-sell.

Because of the extreme risk involved, short-selling should only be attempted by experienced traders who are familiar with the risks and who have the resources to cover losses.


What is an IoT Module?

What is an IoT Module?

You’re probably familiar by now with the IoT, or at least with devices that are connected to the IoT. Things like smart showers and doorbells that reach you when you’re away from home.

You can read more about IoT devices here.

Or if you want to learn about how the IoT works, click here.

But, even if you’re already familiar with the concept or the tech, you may be wondering what makes it all possible.

The answer is – lots of things working together.

Most IoT devices require mobile networks, the faster the better. This is one of the reasons IoT hasn’t completely revolutionized our world yet. 4G just isn’t enough. We’re waiting for 5G, but the infrastructure required is years away.

Another important component to IoT is the modules – the tiny chips that are implanted in devices to make them capable of communicating with one another.

Modules allow devices of all kinds to talk to one another, so to speak. They transmit data across the network – the more complicated the data, the more bandwidth needed. Hence the need for 5G.

Fortunately, not all modules require such high speeds. There are some companies making modules that work now, using existing infrastructure. These companies have an edge because they are able to enter the market now before the massive influx of tech that will hit the market once 5G becomes a reality.

Companies like GeoTraq are using 2G, which isn’t used by the cellular industry, so it’s wide open. They don’t have to compete for space, and they don’t have to wait for infrastructure to be built. Because of this, they are able to offer their modules to big industry now. Industries like agriculture, freight, shipping, and more. The possibilities are endless really, making their list of potential customers virtually endless.

The modules are capable of transmitting data between devices. They can be used for tracking, monitoring, and relaying information instantly.

Imagine luggage fitted with one of these virtually weightless, tiny modules – airlines would save fortunes and customers would avoid the stress and inconvenience of lost luggage.

Parents can place a small, disposable module in their child’s backpack and know where he or she is at all times.

Your cell phone can be fitted with one of GeoTraq’s modules, as can your purse or wallet.

And these are just the personal benefits. Companies can use the modules for a variety of jobs.

The modules can also track changes in temperature or environmental factors. A dairy farm, for example, can have these modules in their refrigeration units and receive a signal if the temperature fluctuates – potentially saving millions of dollars in lost product.

The power of GeoTraq’s module could be life-changing for many industries.

Appliance manufacturers can add these inexpensive modules to their units, increasing their competitive edge. Imagine receiving a notification if your hot water heater were to begin leaking or if your fridge lost power. You’d save a fortune in damage or lost goods.

Tech like this will change the face of business as companies move toward embracing the IoT and offering more convenient options to keep up with consumer demand.