Winston-Salem Business Magazine - October 2007 - (Page 46) of major difference between the Dow and other well-known market barometers such as NASDAQ and the Standard and Poor’s 500. Most other indexes weight their stocks by market capitalization (price multiplied by outstanding shares). Additionally, the Dow includes just 30 stocks, as compared to 500 on the S&P index and approximately 4,000 on NASDAQ. Despite these seemingly major differences, the Dow’s longterm historical performance is highly correlated with both broader market indexes and the overall U.S. market; however, most investors do view the more extensive indexes as a better indicator of the market. The Dow’s measure: milestone or meaningless? The Dow has been making headlines recently for breaking the 14,000 mark for the first time. What do these numbers actually mean to the typical investor? While it’s true that nice round numbers do tend to generate lots of buzz, the number in and of itself really holds more emotional value than monetary value. It is important to remember that these averages reveal the general health of stock prices as a whole. When the economy grows, the prices of stocks as a group tend to rise. When the economy is doing poorly, the prices as a group tend to fall. The Dow averages represent the tendencies in the market as a whole. The actual numbers are just notches on a measuring stick. Although the Dow is an excellent measure for comparing what is happening today to what happened yesterday, be cautioned against using fluctuations in the Dow to predict specific market changes. Consider consulting a financial planner to discuss your individual situation and the financial complexities of investing in the stock market. A financial planner can work with you to develop a plan to achieve your goals. This information is provided for informational purposes only. The information is intended to be generic in nature and should not be applied or relied upon in any particular situation without the advice of your tax, legal and/or your financial advisor. Neither Ameriprise Financial nor its advisors or representatives provide tax or legal advice. The views expressed may not be suitable for every situation. Consult with qualified tax and legal advisors concerning your own situation. It is important to remember that these averages reveal the general health of stock prices as a whole. When the economy grows, the prices of stocks as a group tend to rise. Where are you headed? Do you need: • Career Coaching • Sales Training • Professional Refining Let Cathy help you sort it out! Cathy Seaver Sales Trainer & Coach 926•4733 Enhancement • Refinement 46 OCTOBER 2007 http://www.bleurestaurantandbar.com http://www.bleurestaurantandbar.com
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