With the advent of online trading it is no longer necessary or even desirable to restrict your investments to just your ‘local’ markets. Inevitably people will still gravitate more to their own markets as they will, almost by default have more knowledge of them. People will simply come across more local information on company performance, etc. from the newspapers they read on a daily basis or the news channels they watch.
However that should not restrict your investment decisions. Indeed much can be said, as ever about not having all your eggs in one basket. That well worn phrase applies equally to diversifying your portfolio between different markets as well as different companies or instruments.
Let’s take a brief look at the major global market indices investors should consider keeping an eye on.
The US Dow Jones Industrial Average is the oldest and probably best known of all the major global markets. Created by Charles Henry Dow in 1896 it is still regarded as the bell weather of the world economy. When America sneezes the rest of the world catches a cold. And it’s the performance of the Dow that remains the benchmark of how serious that cold will be.
S & P 500
The Standard & Poors 500 is another important major US Index Tracking a broader range of companies than the Dow. Created by Standard & Poors this index measures the 500 largest (by market cap.) US companies. It is arguably more representative than the Dow and is closely watched by US financial managers.
The US Nasdaq is a formalised market and its indices cover only companies that are traded on it. The companies cover a broad range of industries but the concentration has been largely in technology and Internet stocks and companies with a smaller market capitalisation.
The UK’s FTSE 100 (commonly known as the ‘Footsie’) and is the major barometer of the UK stock market and wider economy. The index, run by the Financial Times covers the 100 largest companies in the UK
Other indices run by the Financial Times are the broader FTSE 250 and FTSE All-Share wich by definition cover a broader range of companies. Both indices are still largely ‘skewed’ by the top 100 companies included in the Footsie
The UK’s Aim (Alternative Investment Market) wa launched in 1995 and was set up primarily as a way to raise capital for smaller companies. No capitalisation requirements exist for companies to be quoted on this market.
This index is Japan’s equivalent of the Dow or Footsie
CAC – 40
This index tracks the top 40 shares trades on the Paris (France) Stock Exchange.
This index tracks the top 30 shares trades on the Frankfurt (Germany) Stock Exchange.
With the advent of online trading it is now possible for investors across the globe to easily access any of these major markets.