The NASDAQ In Simple Steps...Created in 1971, the NASDAQ was the world's first electronic stock market and is now the largest U.S. electronic stock exchange. With approximately 3,300 companies, it lists more companies and, on average, trades more shares per day than any other U.S. market.
The initials stand for National Association of Security Dealers Automated Quotations. It is a computer operated system owned by the NASD that provides dealers with price quotations for stocks and securities traded through the NASDAQ.
Over the years, the index has proved to be volatile. It obviously was a major beneficiary of the tech boom of the late 1990s, but also faired equally poorly when that bubble burst. Having then regained some ground, the financial crisis of 2007/8/9 was very rough on the bourse. As noted above, the Composite Index passed 1,000 in July 1995, but in March 2009 it hit an intra-day low of 1,265. This is despite passing 5,000 in the year 2000. This kind of volatility is not for the easily scared or everyday investor and is why much of the 'day trading' in the United States - and around the world - is conducted here. In some ways, this volatility fuels more volatility. Short term traders are drawn in to the market seeking the fast price moves they need, but by definition, that makes prices in the market less stable, which draws in more short term traders. This is a phenomenon that George Soros calls 'reflexivity' and describes the ability of the bigger players in a market to move the market with their actions. Obviously, this is more likely for the big hedge funds and investment bank 'prop' trading desks (proprietary trading means that they trade on their own account rather than for clients). These are known as the 'hot money'. Beware of being caught on the wrong side of their momentum! Indices of The Nasdaq Stock Market: The following common securities are eligible for index inclusions. There is no distinction between either the National Market vs. the SmallCap Market, or domestic US vs. Non-US securities. Security Class American Depositary Receipts (ADRs) Common Limited Partnership Interests Ordinary Shares Real Estate Investment Trusts (REITs) Shares of Beneficial Interest (SBIs) Tracking Stocks The following issue types are not eligible for inclusion in the indices: closed-end funds, convertible debentures, exchange traded funds, preferred stocks, rights, warrants, units and other derivative securities. If you would like to see the latest news and prices for the Composite index, please follow this link to Yahoo! Finance . To read more about NASDAQ related topics, please visit:
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