Better to invest in Vanguard 500 Stock Index Fund or Total Stock Market Index Fund?
Q. I am a young investor interested in investing in a roth IRA and am interested in the Vanguard family. Currently my IRA is with a bank with a very low interest rate. I have researching different funds and like Vanguards no load index funds. Which is better to invest in?? 1. Vanguard 500 Stock Index Fund 2. Vanguard Total Stock Market Index Fund
Asked by Tance G - Mon Mar 9 13:18:44 2009 - - 6 Answers - 0 Comments

A. The question is actually a very interesting question. Here is why. Both indexes are capitalization weighted. What that means to you the investor is that both on a market value basis are going to contain very nearly the same weight of stocks. What I mean by that the top 10 holdings of both will contain exactly the same stocks in almost exactly the same proportions. Even though the total market index contains many more stocks the additional stocks make up a very small portion of the total. The top 10 holding of the 500 index make up 22% of the total but only 18.5% of the Total Market index--not all that much difference. When you compare the returns over the years of the two they again are very similar. The 10 year return for the 500… [cont.]
Answered by muncie birder - Mon Mar 9 15:35:02 2009

How does the stock market indexes work? How do you compute for the stock index?
Q. How does the stock market indexes work? How do you compute for the stock index?
Asked by nextbase - Mon Oct 1 20:38:54 2007 - - 2 Answers - 0 Comments

A. First order explanation: DJIA weighs against the stock price for the 30 companies it tracks. For example Stock A is $40/share while Stock B is $20/share Stock A's movements will affect ~ 67% of the two stock "DJIA" index. S&P 500 weighs against the market cap of companies. Therefore one ultra-cap company will have a dominate affect on the index movement verses many less large cap companies. I only talked about two major indices but the formula for calculating their "price" is pretty involved. Check out some books on stocks and indexes or visit websites like investopedia.com, fool.com, etc. Also the indices and stock exchanges have their own websites which will go into more detail.
Answered by D - Mon Oct 1 20:48:23 2007

Fastest / most frequently updated / accurate stock market index ?
Q. What is the fastest stock market index that is accurate down to a fraction of a second and has tons of companies to look at on it Certainly not the newspaper right?
Asked by Labrythn - Sat Jun 28 01:29:06 2008 - - 1 Answers - 0 Comments

A. I would go for S&P500. Most indexes/ stocks are updated fast enough that any lag is virtually nonexistent.
Answered by FatHalo - Sat Jun 28 01:36:48 2008

What does a single point in a stock-market index mean (e.g. Dow Jones)?
Q. What does it mean when you hear that a stock-market index, such as the Dow Jones for example, rises or falls? What does a single point on such an index represent?
Asked by Timwi - Wed Mar 12 16:26:14 2008 - - 2 Answers - 1 Comments

A. A point drop basically mean the stocks of the company the dow jones consist of, overall together has lost $1 value all together. Dow jones is basically like a mutal fund that contains 30 of the largest and most widely held public companies in the United States. A point drop mean that combined these 30 stock lost $1. A point drop on the market is equal to a $1 drop in price of what whatever your talking about, stock, mutual funds, bonds, indexes, whatever.
Answered by Mike - Wed Mar 12 18:00:25 2008

What is going on with the stock market!!!? All 3 of my index funds are sinking like crazy...?
Q. I own vnaguard total international stock index, total stock index, & gaaex (alternative energy companies)--- ALL are sinking EVERY day for the past few days--- Im losing 1000s... is it time to pull out or wait it out? I am willing to leave this money alone for 5-10 years --- but all these sharp declines across the board are making me jittery
Asked by marycotter5678 - Fri Jan 18 09:34:26 2008 - - 8 Answers - 0 Comments

A. From the tone of your question, it sounds like you have taken on more risk than you can tolerate. That indicates that you are probably in the wrong investments. If you did not do this when you bought your funds, its time to consider why you should won these investments, and what catalyst will cause you to sell. Each or your funds is reacting to slightly different catalysts. 1;) alternative energy index: This fund will tend to move with the price of crude oil. Crude has fallen back down to the $90 level. Its fairly normal for oil to sink as we approach the end of the heating season, then pick up again when the summer driving/hurricane season starts. If you believe the long term trend for energy demand and oil prices is up, just… [cont.]
Answered by bookbyte - Fri Jan 18 10:21:00 2008

What does it mean when a stock market index rises (lets say a market capitalization index)?
Q. in terms of share prices, shares outstanding, volume of trading, economic activity etc
Asked by kenshin - Mon Dec 21 01:26:29 2009 - - 3 Answers - 0 Comments

A. Basically means that the stocks in the index went up in price.
Answered by Norrin - Mon Dec 21 03:35:21 2009

Is there an Index of the stock market that you can buy/sell options for?
Q. If the stock market is going up and I wanted to use options for the broad market, is there and index or fund that I could do that with?
Asked by Brenda K - Thu Feb 22 14:00:15 2007 - - 4 Answers - 0 Comments

A. You can get a list of all the index options, including more than 25 considered broad market, traded on the CBOE at If you are interested in ETFs as well, you can find them at
Answered by zman492 - Thu Feb 22 15:57:16 2007

What does benchmark index in stock market means?
Q. How does the company calculate benchmark index and how do you measure it with your own funds?
Asked by Empty Cup - Tue Oct 14 23:28:21 2008 - - 1 Answers - 0 Comments

A.
Answered by jeff410 - Tue Oct 14 23:34:47 2008

How a NRI can buy Index fund of Indian Stock Market from outside India?
Q. I am living in Dubai and want to buy Index fund of Indian stock market from here. Can anybody please guide me for this?
Asked by Amu - Sun Dec 9 11:26:50 2007 - - 1 Answers - 0 Comments

A. A broker that deals internationally would be best. THe best I can think of is Chase. Also J P Morgan could help with that too.
Answered by Whats Up Doc - Thu Dec 13 11:17:47 2007

what are the differences between Stock Market Index & Exchange Traded Funds?
Q. Pls Help n Ten Pts be given =) God Bless
Asked by Shaun T - Wed Jan 9 09:11:30 2008 - - 1 Answers - 0 Comments

A. An Index is just a way to keep track of how the entire market is doing. An ETF is an investment vehicle. Its like a share on a basket of stocks. This basket of stocks can either track (ie try to match the performance) an index (SPY tracks the S&P500, QQQ tracks the NAsdaq 100) or just a specific secto (XLE tracks energy)
Answered by traderbobhn - Wed Jan 9 09:18:59 2008

How to hedge an equity portfolio with stock market index contracts?
Q. I have a question about how you hedge a portfolio of stocks with a stock market index. The question I am trying to answer is this: Suppose that in March 2010, John Smith, the portfolio manager of Esop Insurance Company, has a portfolio of stocks valued at $100 million that moves percentage-wise one-for-one with the S&P Index. Suppose also that the March 2011 S&P 500 Index contracts are currently selling at a price of 1,000. a) How many of these contracts should John sell so that he hedges the stock market risk of this portfolio over the next year? b) What happens if the S*P Index falls 10%? Anybody know how to solve this? Thanks in advance. I have some ideas but I am not sure about them: a) To completely hedge this position, the… [cont.]
Asked by matjusm - Thu Dec 3 08:09:51 2009 - - 1 Answers - 0 Comments

A. index futures go by the 1000. so youll need to sell 100.000.000 / 1.000 contracts. thats 100.000 future contract.
Answered by mrzwink - Thu Dec 3 08:18:00 2009

What is the importance of stock market index?
Q. add math
Asked by missred - Sat Jun 19 08:39:00 2010 - - 4 Answers - 0 Comments

A. An index is a way of grouping securities. A, say, health care index will group multiple companies in the health care sector and track them simultaneously according to the definition of that index. The importance is that it enables researchers to draw focused and exchangeable data. If one researcher developed some theory on the health care industry some other researcher may find it to not hold true simply because of how they each define the health care industry, whereas, if the theory was based on the health care industry as measured by a given index then there would be no questions as to the definition of that industry. They also serve as the bases for index funds, which likewise enable investor to focus their funds on a given,… [cont.]
Answered by Joseph - Sat Jun 19 14:01:24 2010

Does a stock price index reflect the actual value of a market index based portfolio?
Q. If I were to buy a portfolio of stocks of, say, $ 10,000, with the same composition and in the same proportions as the S&P500 and, after one year that index had a variation of, say, +15%, would my portfolio be worth exactly $11,500? If not, why?
Asked by Sergio P - Wed Feb 27 15:45:40 2008 - - 3 Answers - 0 Comments

A. No. There are transaction costs. So the difference would be the commissions on the 500 stocks that are in the s&p500, (which would be considerable since you're dividing 500 stocks into only $10,000)--remember there's a price for EACH trade. You'd be better off buying an ETF that replicated the S&P500 index so that you only pay the one commission for the trade. BUT you'd still always underperform the benchmark index because of the transaction costs and imbedded management fees.
Answered by pretzel2222 - Wed Feb 27 15:53:52 2008

how do I calculate the P/E of a Stock market index?
Q. I am aware of how P/E is calculated for a stock , need to understand how it is calculate for the broader market index
Asked by pk - Wed Mar 1 01:11:49 2006 - - 2 Answers - 0 Comments

A. You will need the stock prices at the time divided by the earnings per share and proportioned off by the weight given to them. You will have to know all the P/Es of all the stocks and the weight given to all the stocks. Many ETFs only list the top weighed stocks in their index. Some will give you the names of all their stocks but not how they calculate the weight. They might do it to prevent a true mimic of their index without paying the fees to own the index. Generally they will mention the PE on their own.
Answered by gregory_dittman - Wed Mar 1 01:33:05 2006

What is a stock market? No links please explain as simply as you can?
Q. what are stocks, shares? What do they mean by stock market index? what are nasdaq, nyse? what do points symbolise? How does the market correlates with the economy? Hypothetically, how do you invest in the stock market and get money? Explain any other things that you find necessary.
Asked by ilovetv12345 - Mon Dec 1 23:34:02 2008 - - 3 Answers - 0 Comments

A. Owning a share or stock of a company is owning part of the company. One is usually something really small like 1/2000 of a company. The price goes up or down depending on how much people think the whole company is worth. The stock market index is a measure of the value of all the stocks that are listed on that index. Nasdaq and NYSE are examples of stock exchanges. These are places that people wanting to buy or sell stocks come together. How the market performs correlates positively with the economy. When the economy is good the value of companies generally increase and so the market increases. Generally, you make money by buying stock (usually through a broker) at one price and selling it later at a higher price. You could also… [cont.]
Answered by woshaugh - Mon Dec 1 23:56:05 2008

Based on the P/E of the broader stock market index, how do u determine whether the market is overvalued?
Q. Based on the P/E of the broader stock market index, how do u determine whether the market is overvalued?
Asked by pk - Wed Mar 1 02:04:07 2006 - - 1 Answers - 0 Comments

A. P/E measures "payback period", which is rougly equivalent to the inverse of the interest rate. Thus, a P/E which is GREATER than "the" interest rate is overvalued. For example, if P/E is 20, and "the" interest rate is 6% (0.06) then the inverse is 16.6 and then the market is overvalued... However. 1) What is "the" interest rate to be taken into account? First, it should a real interest rate. Second, it should be an interest rate for assets with the same uncertainty as the stock market (or see 3 below) 2) The P/E can be larger if you expect profits to grow a lot and/or for a long period. 3) The P/E can be larger if the uncertainty (volatilty) tends to diminish. Currently, volatility has been coming down for several years; the markets… [cont.]
Answered by Manolo - Wed Mar 8 15:41:11 2006

How can I Convert the stock market indices into dollar terms?
Q. My Economics teacher asked me to convert the stock market returns of some countries into dollar terms. I don't know how I can do this... Can someone explain?
Asked by Joel - Sat Nov 14 09:23:52 2009 - - 1 Answers - 0 Comments

A. To convert stock market indices into dollars, you need to find out the number of shares on each index. This is going to be the tough part of your search. However, the formula is easy, as I have it below. Index level= (Price of stock* Number of shares)*Free float factor/ Index Divisor. The *Free float Adjustment factor represents the proportion of shares that is freefloated as a percentage of issued shares and then its rounded up to the nearest mulitple of 5% for calculation purposes. To find the free-float capitalization of a company, first find its market cap (number of outstanding shares x share price) then multiply its free-float factor. The free-float method, therefore, does not include restricted stocks, such as those held… [cont.]
Answered by Timmy - Sat Nov 14 11:37:40 2009

in which way politics,sports affects stock market index(sensex)?
Q. in which way politics,sports affects stock market index(sensex)?
Asked by venkat - Thu Jan 10 06:28:33 2008 - - 1 Answers - 0 Comments

A. any political movement through which govt stability will be affected, or economy suffered could effect mkt negatively & vise versa. sports not much affected ,except some world cup cricket , or some important match day on which day participation of treaders investors comes down
Answered by Udit D - Sat Jan 12 03:30:25 2008

Shall one has to wait till the last day of expiration in case of Index Options ( Indian Stock Market NSE ) as?
Q. stock market ) , as all index options are european type. OR can they be closed as per profit as in the case of stock options
Asked by vani p - Thu May 20 10:12:28 2010 - - 4 Answers - 0 Comments

A. well, I am not sure about this...by the way you can contact any trader who deals in share trading like Mansukh, Sharekhan etc..
Answered by Amit - Fri May 21 07:49:50 2010

what is the uses of stock market index ?
Q. uses
Asked by missred - Sat Jun 12 20:46:26 2010 - - 4 Answers - 0 Comments

A. I don't know whether you wanna know about why stock market or Index only but from your q you wanna know about index. There is no use Index or even stock market to people who don't invest or trade in market.But for those who trade, Index gives the direction of the whole market for example sensex, the sensitive index of BSE give the direction of the market because the 30 companies in the index are from different fields thereby giving almost whole direction of the market. Some other index gives the direction of only that field e.g Bankex gives only the direction of banking sector.
Answered by SCALE - Sat Jun 12 21:02:29 2010