Understanding the Basics of the US Stock Market
PREFACE
--------------------------------------------------------------------------------
Introduction
Indian Vs U.S stock
About NYSE
About NASDAQ
Width comparing indices
5 Reasons why we should invest in U.S stock
----------------------------------------------------------------------------------
Introduction-:
Today we discuss in our article about understanding the basics of u.s stock markets
how many u.s products we do consume day in and day out
if we are the consumers of those products why not become the owners of those
products and that is the reason why that might be the reason why there are so
many Indians who are going crazy behind this as to how can we invest in the u.s
stock markets but as usual before we start investing we should understand the basics
of u.s stock markets.
Indian Vs U.S stock market
let's try and compare Indian stock markets versus u.s stock markets
so the very first point of difference is that in india
POINT 1
- we have BSE and NSE bombay stock exchange national stock exchange as
our major stock exchanges in india which are the major stock exchanges
- In US stock market they are NYSE and NASDAQ so these are the major
stock exchanges point
POINT 2
Timing in india our markets are open from 9:15 in the morning to 3:30 in the afternoon
- u.s stock markets are open from 9:30 in the morning to four in the evening
POINT 3
the major indices or we call them as index indexes singular indices plural
major stock market indices in India sensex and nifty - the major indices in usa in usa it's dow nasdaq s p 500 and one of the
upcoming indices is russell 2000 which focuses on small caps
POINT 4
circuit filters
circuit filters are market wide circuit breakers so
what is a circuit filter ?
it means that the market holds or stops after certain conditions are hit
what is the indian scenario if markets crash?
by 10 percent there's a halt at 15 another hot and if market crashes by 20 percent
market stops for the entire day these are the levels of fault or stoppages in usa the
levels are 7 ,13 and 20
POINT 5
one last amazing point of difference in indian stock market and u.s stock market is
that can we invest in fractional shares so just as an example
- " i'm sure many many of you might not have invested in mrf share why
so expensive 80 000 rupees plus for one share so expensive i can't afford it right it
would have been so amazing if i can invest 100 share of mrf but unfortunately
that's not allowed so in India we are not allowed to invest in fractional
shares minimum share that you have to buy is one
- but in u.s stock markets fractional investment in shares is allowed so i hope
you have understood the major five points of differences between Indian stock
markets and u.s stock markets
"now we just try to understand the difference between Indian stock exchanges and the u.s stock exchanges"
the two major stock exchanges in u.s one is nyse and one is nasdaq so let's compare
them one by one first we are going to compare
nyse's major points versus nasdaq's major points
ABOUT NYSE -:
>> so first nyse it is one of the oldest stock exchanges and nyse was founded way back in 1792
>> The market capitalization of an nyse it is 25 trillion dollars
>> right now nyse has 2800 companies which are currently listed
vis-a-vis
>> In nysc more of blue chip industrial companies are listed in
>> nyse have a trading floor
ABOUT NASDAQ-:
>> on the contrary nasdaq was founded in 1971 and it is world's first and largest
electronically traded stock market
>> market capitalization of an nasdaq it is 20 trillion dollars that's the
second largest
>> right now nasdaq has 3300 companies which are currently listed
vis-a-vis
>> In nasdaq more of technology-based company are listed
>> nasdaq doesn't have a trading floor
companies are listed
nasdaq and nyse both are huge in their market capitalization how huge i'll give you
a simple comparison our entire indian economy is like three trillion dollars but if
i compare it with the market capitalization of an nyse it is 25 trillion dollars that's
for nyse and for nasdaq it is 20 trillion dollars that's the second largest
what kind of companies were listed in nyse and in nasdaq?
NYSE
I just told you like half a minute ago that in nyc traditional blue chip companies are
listed and in nasdaq i.t related companies are listed now what does that mean let's
understand so in the stock biggies are birth share hathaway, alibaba group holding
company johnson and johnson jp morgan chase and
company exxon mobil corporation bank of america walmart stores inc wells fargo
and company visa inc procter and gamble company at inc and pfizer inc so all these
are all these are blue chip traditional companies
NASDAQ
now which companies are the stock biggies which are listed in nasdaq it's apple
amazon microsoft alphabet that's google tesla facebook nvidia paypal netflix intel
adobe zoom oh my god so amazing names but did you understand what difference
what intel was not listed in NYSE alphabet amazon alphabet google amazon
these were not listed in nyc these are listed in nasdaq
WIDTH COMPARING INDICES
now let's move on with comparing the indices like as i told you india has bse and
nse usa has three major stock market indices which are dji there is a dow jones
industrial average we have nasdaq and we have snp 500 as i mentioned some
time ago we also have russell 2000 which tracks all the small cap companies but we
are not going to talk about that index right now we are going to focus only on
top three so let's understand them one by one
DJI(dow johnson INDEX)
- now let's start with understanding the dow jones industrial average dji
also called as dow 30 it tracks 30 bluechip companies which are listed on
nyse and nasdaq means what i'm sure you might have gotten confused how come
an index can track companies which are listed on both nyse and nasdaq
these 30 companies from nyse as well as from nasdaq i hope you have understood
- what's one more important point of dow jones it is a price weighted index
what do we mean by price weighted index stocks ?
which have higher prices will be given more weightage stocks with lower prices will
be given comparatively lower rates
NASDAQ INDEX
- now what does nasdaq represent nasdaq represents an index of more than
2500 companies which are listed in nasdaq tracks those companies which are listed
in nasdaq yes i'm correct so what does this mean nasdaq is the name of that index
- " well as the stock exchange those companies which are listed
in nasdaq but which are headquartered even outside usa nasdaq covers
the top 2500 companies which may or may not be headquartered
in usa "
- it is a market cap weighted index nasdaq will give more importance to market
capitalization
S&P 500 INDEX
s&p 500 index the full form is standards and poor's 500
s&p doesn't track the income levels it tracks 500 largest u.s publicly traded
companies these companies have to be headquartered in usa so this is a
little bit different from nasdaq this index is also a market cap weighted
index means what it'll give more importance to market capitalization rather than
price of stocks
5 reasons why we should invest in stocks which are listed in the u.s stock markets
#1 DIVERSIFICATION
the very first reason is diversification how do we interpret this some money
should be invested in stocks some should be invested in mutual fund some in gold
some in traditional investment instead of all these things if i use only stocks
why stocks only in india why not sat samantha
we should also invest in stocks which are listed outside india
and that can give us a good geographical diversification also to our portfolio
#2 OUTPERFORMENCE
u.s markets have outperformed the indian stock markets if you want to
look at it visually see how u.s marketshave always outperformed the indian
stock markets so if you see all in all the pattern was same but the rate at
which the returns were given by u.s stock markets was a shade higher
as compared to the indian stock market
#3
we'll get an exposure to all these high-tech company stocks like apple, amazon,
google, alphabet basically why not invest in these shares if i'm
using the products of these companies day in and day out
#4 DEPRECIATING INDIAN RUPEE
Invest in u.s stock market is to get a very amazing advantage of the depreciating
Indian rupee let's take an example-:
"
assume today's rate of one dollar of INR versus USD is one dollar is equal to 72
rupees way back in 1947 the rate was one dollar is equal to one rupee now assume
assumption economic assume that at that point of time i was allowed to invest in
u.s stock markets and at that time some share "abc"(company name) incorporated
whatever that was priced at one dollar and today the price of that same company
today also it is one dollar only so as an investor did i gain anything 1947 also it was
one dollar today also it is one dollar as an investor i gained a lot 73 times i've
enjoyed so that is the impact of a depreciating rupee
"
#5 FRACTIONAL SHARES
" we can invest even in fractional shares fractional investment is allowed in simple
words i can invest in 110 tesla 110 share of tesla i can invest in one fifth share of
berkshire hathaway and that's that's all i think these are the top five reasons i
believe why we can invest in u.s stock markets "
how do we invest in companies which are listed in usa
for that you need to open an account and you can open an account with end
money free of cost in just two minutes even when you buy or sell shares the
brokerage is zero so free brokerage free account opening how do you proceed
you just have to head on to the end money app go to the us stocks from the
dashboard
click on create free us stock account then you will get some basic screen
instructions fill in your details it should not take more than two to three minutes
and done there you go you have a u.s stock account and that's where you can start
your journey of investing in stocks which are listed in the u.s stock market
CONCLUSION -:
I HOPE YOU GUYS UNDERSTAND PROPERLY INVESTING IN US STOCK
MARKET IS BETTER FOR YOU OR NOT IF YOU GUYS HAVE ANY DOUBT JUST
COMMENT DOWN AND ASK ANYTHING I WILL TRY TO EXPLAIN WANT
MORE CONTENT RELATED FINANCE BOOKMARK OUR WEBSITE
Post a Comment