Other'zz

Dow Jones Industrial Average - DJIA

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.

Notes:

Often referred to as "the Dow," the DJIA is the oldest and single most watched index in the world. The DJIA includes companies like General Electric, Disney, Exxon, and Microsoft.

When the TV networks say "the market is up today," they are generally referring to the Dow.

Blue Chip

A security from a well-established and financially-sound company that has demonstrated its ability to pay dividends in both good and bad times.

Notes:

These stocks are usually less risky than other stocks. The stock price of a blue chip usually closely follows the S&P 500.

The name "blue chip" came about because in the game of poker the blue chips were traditionally the most expensive ones.

Dow Jones Transportation Average - DJTA

The Dow Jones Transportation Average is a price-weighted average of 20 transportation stocks traded in the United States. The average was started back in 1884.

Notes:

This index includes airlines, railways, trucking, and delivery companies.

Dow Jones Utility Average - DJUA

The Dow Jones Utility Average is a price-weighted average of 15 utility stocks traded in the United States. The DJUA was started back in 1929.

Notes:

The utility average tends to decline when investors expect rising interest rates. Utilities tend to borrow a lot of money and, consequently, are more sensitive to changes in interest rates.

Dogs of the Dow

An investing strategy that consists of buying the 10 DJIA stocks with the highest dividend yield at the beginning of the year. The portfolio should be adjusted at the beginning of each year to include the 10 highest yielding stocks.

Notes:

The strategy was formulated in 1972 and has proven to be successful. In fact, as Dog of the Dow investors readjust their portfolios each year, it places pressure on the stocks involved.

Nasdaq

Created in 1971, the Nasdaq was the world's first electronic stock market. The Nasdaq is a computerized system that facilitates trading and provides price quotations on some 5,000 of the more actively traded over-the-counter stocks.

Notes:

The term "Nasdaq" used to be capitalized "NASDAQ" as an acronym for National Association of Securities Dealers Automated Quotation. In recent times, the acronym was dropped, and Nasdaq is now used as a proper noun.

The Nasdaq is traditionally home to many high-tech stocks. The big ones include Microsoft, Intel, Dell, and Cisco.

New York Stock Exchange - NYSE

A corporation, operated by a board of directors, responsible for listing securities, setting policies, and supervising the stock exchange and its member activities. The NYSE also oversees the transfer of members' seats on the Exchange, judging whether a potential applicant is qualified to be a specialist.

Notes:

The NYSE uses floor traders (people) to make trades, whereas the Nasdaq and many other exchanges are computer driven.

Standard and Poor's 500 Index - S&P 500

An index consisting of 500 stocks chosen for market size, liquidity and industry group representation, among other factors. The S&P 500 is designed to be a leading indicator of U.S. equities, and it is meant to reflect the risk/return characteristics of the large-cap universe.

Companies included in the index are selected by the S&P Index Committee, which is a team of analysts and economists at Standard and Poor's. The S&P 500 is a market-value weighted index, which means each stock's weight in the index is proportionate to its market value.

Notes:

The S&P 500 is one of the most commonly used benchmarks for the overall U.S. stock market. The Dow Jones Industrial Average (DJIA) was at one time the most renowned index for American stocks, but because the DJIA contains only 30 companies, most agree that the S&P 500 is a better representation of the U.S. market. In fact, to many it is the definition of the market. When you hear on the evening news that "the market was up today", the reporter is likely referring to a rise in the S&P 500.

It's tough for individual investors to buy the index - you'd have to buy 500 different stocks. However, it's extremely easy to purchase financial products based on the index, such as index funds and ETFs.