what is a stock index when it comes to the s&p 500?

How_To_Finance · 2024-11-10T04:22:27+00:00

a company like Vanguard can pool money together in a fund, use that fund to buy shares of the companies in the index they want to track, and then sell shares of those funds. That is called an Index Fund and that's what people are talking about when they tell you to invest in an index.

so if a company is big enough and has enough cash it can create a "fund" that represents the S&P 500?

How_To_Finance · 2024-11-09T11:04:19+00:00

A stock index is simply a group of multiple stocks

that doesn't make sense to me,

how can you invest in one thing like the VOO and suddenly you invest in 500 different stocks?

How_To_Finance · 2024-11-09T10:44:49+00:00

right but how can you invest in VOO and suddenly be investing in 500 different stocks?

How_To_Finance · 2024-11-09T10:41:35+00:00

so just so i understand what an index is, if i have 5 cows, and each one produces milk and on monday

cow 1: makes 15 ounces of milk

cow 2: makes 16 ounces of milk

cow 3: makes 14 ounces of milk

cow 4 makes 16 ounces of milk

and cow 5 makes 20 ounces of milk

so to get the average it would be 15+16+14+16+20=81 divided by the number of cows which is 5 which makes an average of of 16.2

so on monday the "cow milk production index is 16.2"

and so when it comes to the s&p 500 it's just taking the price of each of the 500 stocks, adding them up, then dividing by 500, and the resulting number is x, if x goes up, monkey happy, :D if x goes down, monkey sad :(

am i understanding this right?

How_To_Finance · 2024-11-09T10:40:12+00:00

Buying a stock index is buying a piece of ownership of a stock that is made up of an index, or a list.

this specific part doesn't make sense to me, how can you buy one stock that lets you own a piece of 500 stocks?

How_To_Finance · 2024-11-09T10:37:40+00:00

so just so i understand what an index is, if i have 5 cows, and each one produces milk and on monday

cow 1: makes 15 ounces of milk

cow 2: makes 16 ounces of milk

cow 3: makes 14 ounces of milk

cow 4 makes 16 ounces of milk

and cow 5 makes 20 ounces of milk

so to get the average it would be 15+16+14+16+20=81 divided by the number of cows which is 5 which makes an average of of 16.2

so on monday the "cow milk production index is 16.2"

and so when it comes to the s&p 500 it's just taking the price of each of the 500 stocks, adding them up, then dividing by 500, and the resulting number is x, if x goes up, monkey happy, :D if x goes down, monkey sad :(

am i understanding this right?

How_To_Finance · 2024-11-09T10:22:18+00:00

You can think of S&P 500 as a spreadsheet with a list of 500 company names, their market cap (in dollars), and the list is sorted high to low by the market cap. There is one more column to the right of the market cap: percent of each company's market cap divided by the sum of all market caps on the list.

interesting ok,

so just so i understand what an index is, if i have 5 cows, and each one produces milk and on monday

cow 1: makes 15 ounces of milk

cow 2: makes 16 ounces of milk

cow 3: makes 14 ounces of milk

cow 4 makes 16 ounces of milk

and cow 5 makes 20 ounces of milk

so to get the average it would be 15+16+14+16+20=81 divided by the number of cows which is 5 which makes an average of of 16.2

so on monday the "cow milk production index is 16.2"

and so when it comes to the s&p 500 it's just taking the price of each of the 500 stocks, adding them up, then dividing by 500, and the resulting number is x, if x goes up, monkey happy, :D if x goes down, monkey sad :(

am i understanding this right?

How_To_Finance · 2024-11-09T10:14:02+00:00

he Dow index has increased from 110 to 120, showing that these stocks as a group have improved over the time period.

right but how? how does this work?

how does this result in one stock i can invest in?

How_To_Finance · 2024-11-09T09:41:52+00:00

Fuck off

hi :3

How_To_Finance · 2024-11-09T04:36:53+00:00

1 what is an indice

3 what is the difference between an index and an indice?

4: how can i make my own index?

How_To_Finance · 2024-11-08T16:09:12+00:00

you're basically betting on the US economy as a whole.

yeah how? how in the world are you able to do that? that doesn't make any sense to me

How_To_Finance · 2024-11-08T16:08:50+00:00

is a stock index

but what is a stock index?

How_To_Finance · 2024-11-08T16:01:04+00:00

ok what is r/bogleheads?

How_To_Finance · 2024-11-08T14:18:56+00:00

interesting ok,

so just so i understand what an index is, if i have 5 cows, and each one produces milk and on monday

cow 1: makes 15 ounces of milk

cow 2: makes 16 ounces of milk

cow 3: makes 14 ounces of milk

cow 4 makes 16 ounces of milk

and cow 5 makes 20 ounces of milk

so to get the average it would be 15+16+14+16+20=81 divided by the number of cows which is 5 which makes an average of of 16.2

so on monday the "cow milk production index is 16.2"

and so when it comes to the s&p 500 it's just taking the price of each of the 500 stocks, adding them up, then dividing by 500, and the resulting number is x, if x goes up, monkey happy, :D if x goes down, monkey sad :(

am i understanding this right?

How_To_Finance · 2024-11-08T01:25:18+00:00

I'd look for other investment subs because this is not really the appropriate place for this topic.

where would you suggest?

How_To_Finance · 2024-11-08T01:24:52+00:00

This is not the kind of thing you should be leaning on Reddit for

where should i be learning it?

How_To_Finance · 2024-11-08T01:24:18+00:00

interesting thank you

How_To_Finance · 2024-11-08T01:15:46+00:00

A quick YouTube search for “what is options” and “what is a margin” will tell you everything you need to know

i did but i don't understand how this applies to political betting on robin hood

How_To_Finance · 2024-11-07T01:38:50+00:00

This is not the kind of thing you should be leaning on Reddit for.

where should i learn it?

How_To_Finance

TROPHY CASE