Developing a deeper understanding of the stock market requires a significant amount of study. Mapping a strategy that delivers an improved understanding of the financial world requires insight, attention, and resources worth your trust.
Successful investment strategies are directed by accurate research dictating when to make an investment. Knowing when to exit an investment is equally important and a strong argument in favor of the use of indexes when beginning to explore the financial potential of the U.S. stock market.
The Dow Jones Industrial Average (DJIA) and the S&P 500 are standard references. The members of these organizations are selected by committee and must meet a variety of conditions for inclusion. The DJIA was introduced in 1896 by Charles Dow and currently includes 30 of the largest and most powerful companies in the U.S
It’s is often referred to as “the market.” But it is not the only source following the performance of U.S. stocks. Some might argue that by limiting itself to such a small sampling of companies—stable blue chip companies selected editors from The Wall Street Journal—the DJIA’s benchmark is unable to adequately represent the performance of the over 10,000 public companies in the U.S.
Investors searching for companies that consistently perform successfully refer to indexes for a more accurate report on a company’s valuation. The Russell Indexes are not as well known but they are simply powerful in how they deliver the information sought by investors.
It includes cutting edge technology companies like Apple, manufacturers with strong brand recognition like Johnson & Johnson, and insurance investor Enstar Group Limited—a particular favorite of J. C. Flowers & Co. known for their investment success and commitment to committing their profits to solving global health issues like malaria.
The success of the Russell Indexes is based on their ability to respond to dynamic changes in the world of finance and rapidly respond to changes prompted by corporate actions. The indexes are adjusted in May or June of each year and the adjusted ranking are based on their market capitalizations during that year.
The Russell 3000 Index includes the 3,000 largest stocks traded within the U.S. and features only companies that have been incorporated in U.S. The indexes are focused further into the Russell 2000 Index—small-cap—and the Russell 1000 Index—large cap.