In a previous post about indexes, I identified the Dow Jones Industrial Average and the Standard and Poor’s 500 as the two most frequently referenced. They originated as short-cuts that summarized market trends, and are often used as a benchmark against which investment performance can be judged.
There has been an explosion in the number of indexes in recent years. There are hundreds if not thousands available, enough to slice and dice the markets in as many ways as can be imaged. Some are broad-based, like the NASDAQ Composite with more than 3,000 stocks. Others might track a region, like the EURO STOXX 50, based on 50 large companies in the Eurozone. Some follow companies of a certain size, like the Wilshire US Small Cap. And still others focus on an industry, such as the NYSE Arca (originally AMEX) Semiconductor Index.