Today, Mak and G have a look at different indices like the NASDAQ, Dow, and S&P 500. We look at the differences they have, what companies they contain and how they work…
This episode, I teach Mak and G about the different top indices like the NASDAQ, Dow, and S&P 500.
We talk about the differences between each one, their potential to go up and down in value, and how they really work…
“The NASDAQ is a gauge that gives information…” – Ben Jones
00:55 – How the NASDAQ works.
02:02 – What a ‘tech’ company is.
02:48 – How tech stocks affect the price of the NASDAQ.
03:22 – The Dow and S&P 500 and what makes these different from the NASDAQ.
04:08 – What stocks are in the Dow and why it’s so well-known.
04:52 – What ‘indices’ mean and how companies can be in more than one index.
06:02 – What the S&P 500 is and the type of companies it contains.
Connect with Ben Jones:
DAD: Hello and welcome back to Money with Mak and G. Don’t forget to subscribe, like and comment on the podcast. We’d love to hear from you. Well, we found a script about the NASDAQ that we just didn’t record and produce in the past. So we thought we’d go ahead and have a little fun and do it right now. It’s a blast from the not so past but it’s still fun and we think educating. Woohoo! I can’t believe the NASDAQ is up 2%. I just made $2,000 Today
MAK: Dad, dad, dad, what are you talking about? Are you obsessing about money again?
GRANT: He’s probably having a dream about putting peanut butter all over his body and then rolling round on a bed of Benjamins. You know, the $100 bill.
DAD: Hey, not funny, especially sharing this with all of our fans. Now, I’m talking about the NASDAQ. It’s a gauge that gives information.
GRANT: Is that like a thermometer? When the mercury inside the thermometer goes up, the hotter it is? It’s hot, hot. Ouch!
DAD: Exactly. But the NASDAQ, unlike a thermometer, can go up forever or down to zero.
MAK: So this NASDAQ thingy gives information about something? I bet it’s something to do with cabbage. You know, money.
DAD: Absolutely Macadoo, but the NASDAQ is about companies that do tech.
MAK: Tech. Did you say tech? What the heck is tech? Yes, I did say that.
DAD: Tech is short for technology. So the companies that do tech are part of this special group. We spoke about the company before in another podcast, remember?
MAK: Yeah, McDonald’s is a company that sells hamburgers, delicious hamburgers. And Disney is a company with amusement parks like Disney World, and films like The Little Mermaid.
DAD: Look at this stuff. Isn’t it neat? Wouldn’t you think my collections complete? Anyway, Exactly. And tech companies are pretty much every company that does stuff related to computers. Now, if you had a whiz fizzle, if that was a thing, it might start your flying car. That would be considered a tech company because it would use computers to do something. Or a company that programs video games could be one to.
GRANT: You in the company Nintendo that did the programming for Zelda and created Calamity Ganon that I killed last night?
DAD: Ooh, boy, that’s a little dramatic but yes, there are lots of companies that focus on work with computers. Apple, Microsoft, even Amazon is considered a tech company for stuff it does.
MAK: You mean the company where I bought my Mad Mattr glue?
DAD: Yep, that’s it. So the NASDAQ has a whole bunch of tech stocks. When the price of the stocks in the group go up in price, the NASDAQ goes up.
GRANT: Just like a thermometer.
DAD: Yep. It tells you something like a thermometer does. When the number for the NASDAQ goes up, it says tech stocks are doing better. The companies are selling more and making more money.
MAK: Dad that’s only tech stocks. Aren’t there other thingies like the NASDAQ?
DAD: Wow, Mak, you brought your superpowers today! That’s a fantastic question. Yes, there are several others. One is the Dow and another is the S&P 500.
MAK: Did you say that cow in the Indy 500?
DAD: No! The Dow! Funny enough it’s a family name, the Dow Jones or Dow for short. The other is the Standard and Poor’s 500, or the S&P. The number 500 is for the total stocks in the group. Just like the NASDAQ has a chosen group of tech stocks. There are 1000s of them. These have a chosen group too.
MAK: So this Jones thing, the Dow, how many stocks are in that? And what does it tell us when it goes up or down?
DAD: The Dow is only 30 stocks in it. They are the big companies which are really important. So they’re called blue-chip stocks. A blue-chip is the most valuable chip when playing cards. So this includes Disney, Microsoft, Procter and Gamble, Varizen, Walmart and more.
MAK: Disney, weee!. I know Verizon too, because we used to have our cell phones with them, right?
DAD: Yep. The Dow is the most well-known. it’s been around over 120 years. It’s the second oldest calculation for stocks.
MAK: Is that older than you dad?
DAD: Ha ha That’s so funny little lady. By the way, have you guys seen my dentures?
GRANT: Seriously, dad? Didn’t you say Microsoft is in the NASDAQ?
DAD: Awesome catch, Geeman. That’s true. Sometimes companies can be on several of these indices. Crazy word huh? And index is singular for the NASDAQ or the Dow or the s&p 500. But when talking about several of them together, they’re called indices.
GRANT: So there are a lot of these Mak goes pee?
DAD: Grant! In-di-ces, not Mak goes pee. So NASDAQ is for tech, the Dow is for really big companies from different types of industries. Hey, P&G, which is Procter and Gamble isn’t tech, but it does sell toilet paper, shampoo, deodorant, and many other things Grant you don’t use. So the doubt tells you how the big companies are doing.
MAK: Do you say Coca-Cola is a big company started in Atlanta? Is that in the Dow? And isn’t the recipe for Coca-Cola super-secret held in a vault?
DAD: Yep. The company sells billions with a bee like ban. That’s a lot of the brown bubbly gold. So you have to protect it.
GRANT: That’s crazy.
DAD: I can’t disagree. G.
GRANT: What about the PNG 500?
DAD: Okay, it’s the S&P 500 Standard and Poor. P&G is Procter and Gamble, the company that sells toilet paper. Hey, the S&P is an index that tells you how good the entire United States economy is doing because it has a wide range of companies.
GRANT: What does that mean?
DAD: Well, if you look at how well the S&P is doing, you have a great view on how the oil companies are doing along with the tech and manufacturing companies, consumer products, how they are all doing together is how you view the S&P. If it’s going up a lot, that means they’re all doing pretty well.
MAK: So that means people can find jobs.
GRANT: And people are buying houses and other things and it’s easier to make money, right dad?
DAD: You got it. I think my job here is done. So check out what the Dow, NASDAQ and S&P do daily.
MAK: It goes up and down. We know that was Lesson number one.
DAD: You got it. I’m out and the NASDAQ went up 2%