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ELI5: What’s the difference between the NYSE and the NASDAQ?

reddit.com › r › explainlikeimfive › comments › 1ilrf7f › eli5_whats_the_difference_between_the_nyse_and

Simplistically, NYSE is the senior, old trading style, old style companies versus the Nasdaq, junior but more modern trading style (electronic) and listed companies, especially tech. Some of the techs have grow into today's giant firms giving 'weight' to the exchange and blurring the differences to some extent, at least to retail investors. Answer from Heavy_Direction1547 on reddit.com

reddit.com › r/explainlikeimfive › eli5: what’s the difference between the nyse and the nasdaq?

r/explainlikeimfive on Reddit: ELI5: What’s the difference between the NYSE and the NASDAQ?

October 10, 2024 - Blue Chip” company stocks are traded, like IBM, Ford, etc. and are considered more stable, while NASDAQ is very tech-heavy and contains a lot of growth stocks, so it’s generally more volatile. ... Thank you this makes so much sense now! ... The NYSE and NASDAQ are like trees.

reddit.com › r/stocks › very begginer question nyse vs nasdaq

r/stocks on Reddit: VERY BEGGINER QUESTION NYSE VS NASDAQ

May 9, 2019 -

Hello, starting to learn about exchanges but havent been able to properly understand difference between dealer market and auction market. Hoping someone can help me out.

I understand that NYSE is auction, and that they pretty much just serve as a room to gather buyers and sellers. These buyers and sellers use stock brokers to place orders that get matched by the exchange's "specialist".

However, how is this different that the dealer market?

Dealer market doesnt have physical grounds but isnt it the same thing? Buyers and sellers place their order and the market maker matches them. I guess im confused as to what market makers actually do.

Im sorry if this is wayy too dumb to be on this subreddit, and hope you have a great day.

I've been trading stocks for almost 4 years as a retail trader. Your question went whoosh just above my forehead. I've never heard the terms auction being specific to NYSE or Dealer Market used in connection with NASDAQ. But I'll take a crack at it. Whatever they began life as the computer revolution has totally replaced floor traders. Transactions happen faster than the mind can comprehend. The days of people grasping slips of paper and yelling in a group while wildly waiting their arms is long gone. I think that the commodities market was the last market to move their entire operation to computers.

However, how is this different that the dealer market? On the NYSE, the specialist is supposed to step in and handle a market imbalance. On the Nasdaq, there are requirements for the market makers for keeping a bid and an ask. Here.

Videos

NYSE vs NASDAQ: What is the Difference and What's a Stock Exchange?

NYSE vs. NASDAQ: Comparing America's Premier Stock Exchanges - YouTube

Understanding the Nasdaq and how it differs from the NYSE - YouTube

November 13, 2021

reddit.com › r/explainlikeimfive › eli5 what the difference is between nasdaq, the nyse, and djia?

r/explainlikeimfive on Reddit: ELI5 what the difference is between Nasdaq, the NYSE, and DJIA?

June 4, 2011 -

Our office talk (especially lately) has been about the ups and downs of the DJIA. I never understood how that works in relation to the S&P500, the NYSE, and Nasdaq. Bonus Question - what's all the screaming and yelling on the NYSE floor, and does Nasdaq even have that?

Let's start with what we mean when we say a "Stock." There are lots of technical divisions in the Stock Market (equities, securities, shares, options, etc), but for the sake of this explanation let's generalize and say that to buy Stock in a company means buying a very small "share" of ownership in that company. So if you buy one share of GM (current price $25.86), you become a (very, very small) part owner of General Motors, along with all other stockholders in GM. The New York Stock Exchange (NYSE) is a Stock Market: a Place where people buy and sell shares of Stock (although in the modern world, you don't have to physically be inside the walls of the NYSE to exchange stock). Many companies are "Listed" on the New York Stock Exchange, meaning that you can buy and sell that company's stock at that market. The Price of those stocks are moving constantly as trades occur. So you can look at any of the number of NYSE publishes price data and see the price of GM. But what if you want a quick picture of "The Market" - meaning whether the price of Stocks in general is increasing or decreasing? For that, you might want to track the average price of a group of stocks. This is called an Index. The Dow Jones Industrials Average and the Standard and Poor's 500 are both indexes: they track the weighted average of a number of different stocks. What stocks exactly are part of those indexes changes from time to time, but one of the reasons those 2 indexes are so prominent is that they have been in existence for a long time tracking roughly the same kinds of stocks, so you can look at longer-term trends in the index price. The Dow Jones Industrials Average tracks 30 large US companies, and the S&P 500 tracks (surprise!) 500 US Companies. Now, I've skipped one thing you asked about - NASDAQ, because people use the word to mean two different things. There is a NASDAQ exchange - another Stock Market - that has a different set of companies listed than the NYSE. There is also the "NASDAQ 100," which is another Index, that tracks a set of 100 companies listed in the NASDAQ exchange.

First - a bit about stocks. Generally, you should understand that owning stock is like owning a piece of a company (usually a very small piece). When that company does well, you earn money because you are one of the owners. People buy and sell stock in a "place" called a stock exchange. Nasdaq and the New York Stock Exchange (or NYSE for short) are two stock exchanges where people can buy and sell stock. They are not the only stock exchanges, but they are two of the biggest in the world and the most important in America. Some stocks are available to buy and sell on the Nasdaq and some on the NYSE, but there are no stocks that are available on both. For example, Google is available on the Nasdaq, and General Motors is available on the NYSE. The NYSE is a very big building with a big open room on wall street in New York. At the NYSE, workers called "traders" buy and sell stock for their clients (that's what all the yelling is about). There's another LI5 on how that works . The Nasdaq isn't actually a place - it's a big electronic computer system that replicates what the traders do on the NYSE (so, there's nobody running around and yelling). It doesn't make a real difference to ordinary people whether a stock is purchased or sold on the NYSE or Nasdaq. Sometimes, people want to know how the "stock markets" are performing, because they think that tells them something about the economy in general. So several companies have developed "averages" that try to give a big-picture view of how the stock markets are performing. Two of those averages are the Dow Jones Industrial Average (DJIA) and the Standard & Poors 500 (S&P 500). The DJIA looks at 30 of the most important stocks that are traded on the NYSE and Nasdaq (big companies like Intel, General Electric, Coca-Cola, etc.) and produces an average number that indicates their performance. Since these big companies are so important to the stock market, and U.S. economy in general, this gives a pretty good big picture. The S&P 500 does pretty much the same thing, but it looks at 500 stocks instead of just 30. So it gives a broader picture, and includes some companies that are not as big as the DJIA. So when people say "the Dow is up today" that means the average number produced by the DJIA is higher than it was yesterday - in general, the stock market is doing better. TL;DR: The NYSE and Nasdaq are "places" where you buy and sell stocks. The DJIA and S&P 500 are average numbers based on a sampling of a limited number of stocks, that tell you how the stock markets are performing in general at any given time (e.g., "the Dow is up"=stocks in general are doing better).

reddit.com › r/investing › q: what's the difference between stock exchanges?

r/investing on Reddit: Q: What's the difference between stock exchanges?

July 28, 2012 -

Total noob to stock markets and investing here.

I was driving in my car today and a question popped into my head: why are some stocks listed on the NYSE while others are on the NASDAQ, and so on?

Why aren't all stocks simply traded on one single exchange? What are the benefits/drawbacks for a company to be on one exchange versus another? Do traders have to go through different hurdles to trade on one exchange versus another?

Thanks!

The biggest reason for the different exchanges is because prior to the computer age, they were located in major metropolitan areas. To this day there are many exchanges in the US (NYSE, Chicago Mercantile Exchange, etc) and in major cities in the world (Tokyo, London, Toronto, etc). All of those I think still have physical locations where at least some of the trading happens. I other words, the market has a physical location. In contrast, NASDAQ (and BATS too I believe) don't have a physical location. If a buyer is on a computer In Wisconsin and the seller is on a smartphone aboard his yacht off the coast of Florida, that's where the market is. The market, as they say, lives in the wires. As for why all stocks aren't listed on a single exchange… well there are several reasons I can think of. Regulatory issues would make this almost impossible. Exchanges are companies in the business of making a profit. In the US a single exchange would be a monopoly and we tend to frown on that. Especially internationally, this would be difficult to do at best and impossible at worst. Currency fluctuations, differing securities regulations, etc. The current system works pretty well. There are exchanges that specialize in certain types of financial products. CBOE specializes in options contracts. CBOE Futures does futures contracts. I think the Merc does mostly commodities but I'm not sure. Plus, with almost every trading software out there, you can get quotes from any major exchange so unless you pay attention to which exchange it's on you probably wouldn't notice.

NYSE has a lock on single letter ticker symbols. If you want a single letter ticker, then your stock has to trade on NYSE.

reddit.com › r/fire › why is s&p always recommended over nasdaq even though it underperforms?

r/Fire on Reddit: Why is S&P always recommended over NASDAQ even though it underperforms?

November 9, 2023 -

For the past 40+ years, nasdaq has continually outperformed the s&p 500, essentially over almost any time period. So why is S&P always suggested as the index to invest in and never nasdaq?

Now, I understand that nasdaq is heavily weighted towards tech and the S&P is more diversified. But this should not matter if, over the long term, s&p is outperformed by nasdaq. By quite a significant amount over 40 years as well.

So what gives? What am I missing? Is it solely the advice of diversification over historically less average annual gains?

NASDAQ 100 in general has a higher market beta than the S&P 500, so in theory you should be rewarded with higher returns because you're taking on more risk. It's also had an 80% drawdown which means if that ever happened again, you would need a 400% return to just get back to where you started. It took 15 years to recover from the dotcom crash. If you're looking to actually take money out of your portfolio, that kind of drawdown is unacceptable and you would need to mitigate risk in some way.

essentially over almost any time period. So why is S&P always suggested as the index to invest in and never nasdaq? You sure about that? The short answer is all the companies in the NASDAQ 100 are in S&P 500 (and a total market fund like VTI). You could make the same argument why pick NASDAQ 100 why not just put all your money in Apple. You either believe in diversification or you don't. Will NASDAQ 100 outperform the next 40 years? Maybe but maybe not. I would point out there are tech companies not in NASDAQ 100 so that makes it even more dubious over the long run. It isn't even a pure tech ETF. Investing the NASDAQ 100 is saying: "I believe the 100 largest stocks limited to just those on NASDAQ but not on any other exchange no matter what sector they are or how that will change in the future will always outperform the broader market" If that is your investing premise, understand that is what it is, and you sleep comfortably investing based on that then go for it. Personally though I prefer total market fund over S&P500 or NASDAQ 100.

reddit.com › r/investing › how does it benefit a company to list on nyse vs nasdaq?

r/investing on Reddit: How does it benefit a company to list on NYSE vs NASDAQ?

January 18, 2017 -

Spirit Airlines ($SAVE) just announced a move from NDAQ to NYSE.

What's the benefit? Is the verbiage about how the board believes "the transfer is in the best interests of Spirit's stockholders" just a way of saying it will save the company money but not matter to shareholders at all?

costs: NYSE might offer them a deal on fees because the listing brings trading volume which means money for the exchange
Filing requirements: I think nyse has more requirement than nasdaq but maybe not
inclusion in certain indices: For example, if you want to be in the Nasdaq 100 (QQQ Etf) you need to be nasdaq listed. NYSE has the NYSE Composite. However, each index only allows so many of the same industry which means you need to switch exchanges to get on a major index and get that volume boost.

Probably fees. Pepsi moved from NYSE to NDAQ the other day, SAVE the reverse today. I don't really pay attention to it.

reddit.com › r/infographics › nasdaq-us surpasses nyse in market capitalization

r/Infographics on Reddit: Nasdaq-US Surpasses NYSE in Market Capitalization

September 26, 2024 - According to the World Federation of Exchanges (WFE), Nasdaq's U.S. market capitalization reached $28.2 trillion in August 2024, exceeding the New York Stock Exchange's $28 trillion.

reddit.com › r/explainlikeimfive › eli5: wall street and the new york stock exchange. what are the dow and nasdaq? what does it mean when they lose or gain?

r/explainlikeimfive on Reddit: ELI5: Wall Street and the New York Stock Exchange. What are the Dow and NASDAQ? What does it mean when they lose or gain?

May 21, 2013 - The major difference between NASDAQ and the NYSE is that NASDAQ is newer, and because of when the company was founded and how it marketed itself, NASDAQ has a disproportionate number of "technology" stocks (eg: Microsoft, IBM, Intel, Google, ...

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reddit.com › r/interactivebrokers › does anybody know the difference between nasdaq bx totalview and nasdaq totalview-openview?

r/interactivebrokers on Reddit: Does anybody know the difference between NASDAQ BX TotalView and NASDAQ TotalView-OpenView?

September 9, 2022 -

I'm looking to subscribe to level 2 market data, and these are my two options for NASDAQ and NYSE.

So far I haven't found a difference in the securities these two support.

So what would be the difference between them? Range of securities? Level of depth? Something else?

BX is BATS, Boston Exchange. A different exchange. Basically it adds more market data. The NYSE open book shows most data for NYSE stocks XOM as example, Nasdaq Total Book shows all the data traded on the Nasdaq (NBBO + market depth). For more info I REALLY recommend you, or anybody, to use Google or YouTube. Especially when you are new.

BX is an options exchange.

reddit.com › r/explainlikeimfive › eli5 the difference between the dow, nasdaq, and s&p 500.

r/explainlikeimfive on Reddit: ELI5 the difference between the Dow, Nasdaq, and S&P 500.

June 27, 2020 - So a lot of startup tech companies like Apple and Microsoft were first listed there. NYSE used to have stock symbols of 1,2 and 3 letters while NASDAQ had the four letter symbols like AAPL and MSFT.

reddit.com › r/thinkorswim › what's the difference between the nasdaq on top and the nasdaq on the level 2?

r/thinkorswim on Reddit: What's the difference between the NASDAQ on top and the NASDAQ on the Level 2?

January 11, 2021 -

Hi everyone, I believe I'm missing some fundamental knowledge on how trading works. I've always wondered what is the difference between the NASDAQ shown at the top and the NASDAQ shown in the Level 2?

Correct me if I'm wrong, but I believe the NASDAQ at the top tells which exchange the stock GOVX is listed on. In this case, it's listed on the NASDAQ, but I frequently see NYSE and AMEX also.

I'm confused why the Level 2 has bids/offers from other exchanges. If the stock is listed on the NASDAQ, shouldn't it have quotes only from the NASDAQ? I can see that there also quotes from the NYSE, ARCA, and EDGX as well. What am I missing here?

NASDAQ is an electronic trade desk that trades in the American financial markets along with all the other desks you see under level2.

The Level 2 list box shows you the best bid and ask from market participants. The first column shows you who they are. Either they placed their order directly on NASDAQ, or it might indicate that it's coming from a market maker like ARCA. Don't worry about it.

reddit.com › r/stocks › what are the major differences between the otc and nyse/nasdaq

r/stocks on Reddit: What are the major differences between the OTC and NYSE/Nasdaq

January 26, 2023 -

Everytime I see OTC I think it’s weird, but not much else. I know listing requirements are far less but was curious if anyone had insights into the structural differences between OTC and the standard markets.

Thanks!

OTC is a dealer to dealer market. there are less regulations and its more of a "put your quote up" idea. primary exchanges have many rules and regulations on filing as a company, staying on the exchange, and having price matching rules across liquidity vendors. otc = wild west listed = rules

NYSE is a stock exchange. It sets requirements and procedures and provides infrastructure for quoting and trading in member stocks. OTC is the market in all stocks that aren't listed on a major exchange. The reporting requirements are different, and prices and volumes are generally lower. Trades are made trader to trader, and quotes and trades are listed on an inter-dealer quote system (IDQS) or the pink sheets. An IDQS is any OTC stock listing system compliant with FINRA (the finance industry's self-regulatory authority organization) and SEC (the government securities regulatory authority) standards for OTC listing systems. It has lower requirements (for reporting company information to shareholders and maintaining levels of stock price and company finances) than an exchange. FINRA closed its OTCBB IDQS a couple of years ago and now it's all done by IDQSs run by FINRA members (brokers and other institutions). If a stock can't meet the IDQS listing requirements it can be listed on the OTC Pink Sheets (which are owned by a private company themselves). There are no requirements there for periodic reporting to shareholders or even for registering shares with the SEC, though there are some requirements for number of shares and preexisting partners (so you can't just be one person listing ten shares, it has to be a couple dozen owners with a year of ownership each, and a million shares issued with 250k in float for public trading) and an initial prospectus.

reddit.com › r/answers › are most of the stocks traded on both nasdaq and nyse?

r/answers on Reddit: Are most of the stocks traded on both NASDAQ and NYSE?

March 22, 2020 -

I read about both of them and still confused

According to this article there's quite a difference between the two exchanges. https://www.businessinsider.com/heres-the-difference-between-the-nasdaq-and-nyse-2017-7?amp There's some overlap because some companies dual list on both exchanges.

There used to be a number of smaller exchanges and it was not uncommon for companies to trade on more than one. But most of them have died out or been acquired by the big two. Every time a company trades on an exchange it is selling some amount of control of itself. (That's why it's also called a "share.") If it trades on multiple markets that's separate chunks of ownership. A couple things would be involved. I would imagine you would need the existing stockholders to agree to cross list stock on another exchange. Another is that you'd have to pay certain fees to both exchanges (it costs $500K just to get in to NYSE, and then it's up to $500K a year depending on volume) and also comply with the rules of both exchanges. It seems like the main reason these days a company would dual or multiple list is to be listed in their own national exchange, but also want to tap into the more global US exchanges e.g. NYSE or NASDAQ. This allows them to trade domestically but also attract US and global stock buyers. Toyota , for example, trades on four exchanges: Tokyo (the big Japan one), Nagoya (a local Japan one), London Stock Exchange, which is Europe's biggest and formidable, and finally NYSE. (NYSE, NASDAQ, Tokyo, and London are probably the world's four most important stock exchanges.) Now... Toyota is a pretty huge and strong and profitable company. Most companies are not Toyota. Ultimately it's the same thing as, say, Amazon selling Kindles at both Best Buy and Fry's. Except it's a lot more complicated to implement and maintain. There doesn't seem to be any current companies trading on both NYSE and NASDAQ, though. It has happened in the past, but there wasn't much point, I guess. However, there may be situations where a subsidiary of one company trades its own ownership on another exchange from the parent. Technically it doesn't matter -- the parent company will simply own a significant share of the subsidiary's stocks on whatever exchange its on (nothing prevents a company that trades on one exchange from buying and selling someone else's stocks on another exchange, much like a WalMart worker is allowed to shop at Target). The funny thing is, it wasn't too long ago that NASDAQ was seen as an upstart little player. NYSE has been around over 200 years; NASDAQ barely 50. They also operate very differently in practice. You know the images of "trading floors" and stock traders with blue jackets and numeric name tags looking at monitors and holding up phones to each ear, or yelling and hand signaling each other in a "pit"... NYSE does that, and all stock exchanges did, but NASDAQ has no such thing; it's a hip new modern computer-based thing in comparison, and probably not by mistake, it also has a lot of tech stocks on it. Funny thing is, their model has become dominant and the trading floor is not nearly as significant as it used to be even in exchanges that have one.

reddit.com › r/explainlikeimfive › eli5: what are nasdaq and dowjones

r/explainlikeimfive on Reddit: ELI5: What are NASDAQ and Dowjones

May 14, 2012 -

Are they corporations or what? Every day on the local news they talk about those two and I'm not sure what their significance is.

NASDAQ is a market where stocks are sold. A stock is essentially a share of a company: if you own a stock in, say, Apple, it means you own a part of Apple, and are entitled to a percentage of their profits, depending on the percentage of total stock that you own. Stocks are sold on different markets around the world. There are many big ones in major financial cities, such as London, New York, Tokyo, Hong Kong, etc. The NASDAQ Market is the second largest in the world behind the New York Stock Exchange (NYSE). The Dow Jones Industrial Average (often abbreviated to just 'the DOW') is an index measuring the value of the 30 largest publicly traded companies in the United States. (To be publicly traded means that you have issued stock, and those stocks are traded on markets such as the NASDAQ, NYSE, etc).

A stock is the money a business gets from giving out shares. (Simply and literally: shares in the company by %) A stock exchange or share market is a place where people meet to buy and sell shares of company stock. Some stock exchanges are real places (like the New York Stock Exchange), others are virtual places (like the NASDAQ). NASDAQ is a virtual stock exchange. It stands for National Association of Securities Dealers Automated Quotations. About 3,800 companies trade on it. The Dow Jones Industrial Average, also called the DJIA, Dow 30, or informally The Dow Jones or The Dow or Dowjones (as you put it)) is one of a few stock market graphs used to look at how well a market is doing created by a Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow. There are 30 companies that make up the Industrial Average. It used to be that most of the companies were in heavy industries, such as steel, oil, cars, and appliances, but it now has from many different industries. If you want to buy shares in the big companies that are in the Dow, you trade on the Dowjones. If you want to buy shares in companies that are on the NASDAQ (Microsoft, Amazon etc), you trade on the NASDAQ. The NASDAQ is also used as an index as its an electronic marketplace. TL;DR: They are markets where business people can trade % shares in businesses. This is a good read if you have a little time. Its quite readable.

reddit.com › r/personalfinance › what's the difference between nasdaq 100 and nasdaq composite ?

r/personalfinance on Reddit: What's the difference between Nasdaq 100 and Nasdaq Composite ?

November 29, 2017 -

Hi,

I was searching the difference between Nasdaq 100 and Nasdaq Composite on the Internet. I came across a forum message where a man said that Nasdaq Composite is made of all american and foreign companies listed on Nasdaq and Nasdaq 100 only the top 100 companies listed on Nasdaq.

First, is this true ? And finally, what does "listed on Nasdaq" mean ? What really is Nasdaq ? I'm a bit lost... Here's the original topic if you wanna read it, but use Google Translate (it's in french).

Thanks.

https://en.wikipedia.org/wiki/NASDAQ The composite is the stocks of every company listed under the NASDAQ, the NASDAQ 100 is 100+ equity securities from the 100 largest non-financial companies on the NASDAQ.

Nasdaq is an exchange , similar to the New York Stock Exchange, London stock exchange, Euronext, etc. Your understanding of the 100 vs composite indices is accurate. "listed on nasdaq" means that the shares trade on that platform. Each have slightly different advantages - startup tech stocks usually prefer nasdaq, as the NYSE is really expensive.

reddit.com › r/investing › why is it advised to not put the majority of your money into an index fund tracking nasdaq?

r/investing on Reddit: Why is it advised to not put the majority of your money into an index fund tracking NASDAQ?

August 14, 2025 -

I get that it’s more volatile than the SP 500 but if you keep your money in long term, won’t you come out ahead regardless? I’m just really confused because my wealth advisor ( who is a different person than my fiduciary advisor) told me that if you invest into the stock market long term you’ll be ahead.

Yet, they think investing in the Nasdaq long term is not a good idea and the NASDAQ’s growth is unsustainable. But hasn’t NASDAQ been outperforming the SP 500 for decades? don’t most of the companies on it just get bigger and better over time?

I get that NASDAQ is tech heavy but why does that even scare investors off If society is so tech focused anyway? I did ask the wealth advisor these questions and he couldn’t give me an answer. All he could really say was that fidelity has been doing this 30 years and doesn’t think tracking the Nasdaq long term is a good idea. Even for someone my age ( I am 30)

March 10th 2000 - April 23rd 2015 is why you're getting this advice.

Maybe it's because NASDAQ is more exposed to Tchenology and hence more concentrated thus having higher risk than the broader market, for example a quick glance at the top holdings of QQQ (Nasdaq 100) vs VTI (Total US market) shows that for example QQQ holds around 10% of assets in Nvidia Stock while VTI holds around 6%. If there is a market crash that is particularly harsh for technology such as the dot com bubble you will get hit way harder than someone holding the broader market. In summary your advisor might be suggesting that you are taking extra risk by focusing on the technology sector and some people might be uncomfortable with such extra risk

reddit.com › r/investing › s&p500 vs nasdaq100 index funds

r/investing on Reddit: S&P500 vs Nasdaq100 index funds

August 23, 2024 -

Im looking to invest a lump sum and then additional monthly sums. From my research the Nasdaq100 consistently outperforms the S&P500 every year in terms of growth, however I see almost always people on here suggesting that folks invest into the S&P500. Why is that? What am I missing?

What am I missing? Past performance does not guarantee future returns.

The Nasdaq is tech based. The S&P is large cap US companies weighted by market cap. So if you want more tech exposure, which is generally higher risk high reward, then buy into more Nasdaq. The S&P is generally used as the benchmark to determine how the U.S. equity market is doing. If you want a safe long term fund, invest in a total market ETF. This way you get tech exposure as well. The S&P has a lot of tech too though. All in all it’s just how much you want.

reddit.com › r/explainlikeimfive › eli5: the difference between dow jones, nasdaq, s&p 500, etc.

r/explainlikeimfive on Reddit: ELI5: The Difference Between Dow Jones, Nasdaq, S&P 500, etc.

November 2, 2010 -

i'm five remember!

NYSE is New York Stock Exchange: a stock market in which stocks are bought and sold the old fashioned way by human traders. Makes a good place for news cameras to capture footage of actual traders face palming at their monitors.

DJIA is the Dow Jones Industrial Average: a market index that is sort of like a sum of the stock prices of 30 major American companies. This serves as an indicator of trader's confidence in owning stock in large American companies.

NASDAQ is a stock exchange which is entirely electronic. No exciting backdrops of human traders scurrying around a trading floor, just boring computers with blinking lights pushing trillions of dollars around.

The Nasdaq Composite index is sort of a combined sum of the prices of all 3000+ stocks traded on the NASDAQ, some of which are not American companies. This serves as an indicator of traders overall confidence in owning stocks in general.

The S&P 500 is yet another market index that tracks the price trends of the 500 biggest stocks traded on NYSE and NASDAQ, where "biggest" = biggest market cap = stock price * number of shares

It is important to know that stock market indexes are not "the economy" any more so than today's baseball scores sums up all of "sports", but these indexes can reflect how stock traders feel about the economy, or at least how they feel about owning stocks.

Let's forget for a moment that we're talking about the stock market and pretend that we're making teams of "fantasy redditors". We are going to hold a competition between 3 teams to see who can rack up the most average karma in 1 week.

Each team has a captain, the captains names are: Donald, Nancy, and Stephen.

Rules

Each captain can pick as many redditors as they want on their team.
If a captain would like to, they can use a weighted average for the more popular reddit contributors.
A redditor can be on multiple teams simultaneously

Team Selection

Donald chooses the top 30 redditors throughout the entire community and opts for the weighted average approach. As such, his top two redditors will contribute more to his team's average karma.

Nancy, on the other hand, decides that she wants every single redditor that subscribes to r/technology. As such, her team is comprised of 3,000 redditors and she uses a basic average karma of all 3,000.

Stephen decides that he will hand pick 500 redditors for his team and he will use a basic average of karma. Keep in mind, that it is entirely possible that some of Stephen's team selection could already be on Nancy or Donald's team, and that's totally cool as it is within the rules.

At the end of each day for the next week, the average karma for each team is calculated. It could be that Donald's team karma increased by 10%, Nancy's team karma decreased by 5%, and Stephen's team karma increased by 7%. Whichever team at the end of the week has the largest overall gain in karma is the winner.

The scores of each team would be entirely dependent on the reddit community at-large, what with its continuous upvoting/downvoting.

So, to make this analogous to stock market indices, just imagine that our Team Captains are actually just named different: Donald = Dow Jones, Nancy = NASDAQ, and Stephen = S&P 500. The constant swings in the market are traders/investors buying/selling the same way that redditors upvote/downvote and at the end of the day we have an aggregate output.

Instead of picking redditors, these Team Captains pick companies that are traded publicly.

How does this apply to what people do with their money? Well, many investors, instead of picking a single company to own, will often put money into an investment vehicle that moves with one of the indices.

reddit.com › r/bogleheads › nasdaq 100 or s&p 500

r/Bogleheads on Reddit: NASDAQ 100 or S&P 500

November 14, 2023 -

So, while I know that the NASDAQ 100 is very tech focused and you should strive to diversify the returns have been much better all things considered.

Yes, the tech sector has been doing great the past two decades and I really can’t find any reliable source on NASDAQ 100 returns prior to that.

Going through a back test calculator on both investments starting 2007 (that’s the time it lets me go the farthest in time for NASDAQ) the returns are quite favorable for NASDAQ.

NASDAQ data: https://curvo.eu/backtest/portfolio/full-bull--NoIgYgrgNlAEBC0ogDTFASQKIAYfwFYBmAZQC14BGATlUoF1Gg?config=%7B%22investmentPatterns%22%3A%5B%5B%22one-off%22%2C14000%5D%2C%5B%22recurrent%22%2C1%2C1250%5D%5D%2C%22transactionFee%22%3A1.9%2C%22managementFee%22%3A0.33%7D

S&P 500 data: https://curvo.eu/backtest/portfolio/test--NoIgKgpgzgLiA0xQEkCiAGdAhAYgWQA0CARAVgBYEBGAXTqA?config=%7B%22investmentPatterns%22%3A%5B%5B%22one-off%22%2C14000%5D%2C%5B%22recurrent%22%2C1%2C200%5D%5D%2C%22transactionFee%22%3A1.9%2C%22managementFee%22%3A0.07%2C%22periodStart%22%3A%222007-07%22%7D

After looking at the numbers you can see the NASDAQ is just returning more overall.

Now the problem is should I just put all the money into it or go with the S&P for more diversification and much less fluctuations? Or maybe is it worth to buy both and just adjust the percentage?

Why not 100% Bitcoin? Look at last decades returns….

First off you can invest in both - why not 80/20 or 70/30? Secondly while the Nasdaq has shown greater average returns than S&P500 it is also more volatile and has had long slumps like after the dot com bubble for 10-15 years. Imagine you only invest in Nasdaq over a long time frame using DCA to ride out this risk. Fast forward 20-30 years and hypothetically your hunch was right and it consistently beat the S&P500 and every other index by 1% a year. You're getting ready to retire and draw down your gains to live when boom the market crashes into a recession, or worse, tech stocks stop being the flavour of the month for something else. Your portfolio crashes by 50%. The S&P500 recovers back to where it was over 18 months while your portfolio takes 10-15 years to recover and you are screwed for retirement and now have to keep working until you're 80. This is what terrifies me about 100% Nasdaq only or any other equivalent for your main investment portfolio. Definitely worth having a small % if you want to chase the higher gains but I would take a total world market or US/international share mix 8-9% p.a. avg any day of the week and DCA into that each month for 20-30 years and let compound interest take care of the rest.

reddit.com › user/difference_101 › nasdaq vs. nyse: what is the difference between nasdaq and nyse?

r/u_difference_101 on Reddit: NASDAQ vs. NYSE: What is the difference between NASDAQ and NYSE?

February 18, 2021 - Reviews, Differences, Comparisons and Top Charts