The secret to the highest price in US market history
How could this be possible with the news that the US market has, if forgotten, hit an
all-time high?
I have learned that I can be freed from my work quickly by learning how to make
money by investing. Investing is about moving enough capital to replace my work with
a safe, high-yielding investment.
In other words, it is investing my capital in companies that will work much more
effectively and efficiently than I do.
I receive a portion of the profits earned by the company, and as the value of the
company grows, the value of my investment is recognized as the stock price in the
market.
Therefore, investors should select markets with the highest probability of making a
return and the lowest risk before making an investment choice to increase their odds
of success.
So I'm going to explain the market.
That market is America, not emerging countries. Same story, but one more thing to
think about is that if you invest the money that changed the time of your life and fail,
you should always think that this is a failure of your life as much as the amount of money.
Choosing an investment market is just as important as choosing an investment
company Now the market is chosen.
All that's left is to understand the market and choose the best and most appropriate
way to invest in that market.
The U.S. market is the focus of global capital.
If you look at the daily stock trading value of a company, it often exceeds 10 trillion won.
This amount is equivalent to the daily trading volume of all stock markets in Asian
countries. This is very common.
As you all know, Apple's market capitalization is larger than the market capitalization
of all Asian countries. So, you need to understand the market well, and the way you
approach it must change accordingly.
The Dow Jones Indices is an abbreviation for the Dow Jones Industrial Average.
This index is an index that calculates the market price from the average of 30
blue-chip companies listed on the New York Stock Exchange by Dow Jones as a sample.
The Dow Jones Indices first began calculating indices based on 30 large-cap stocks
in 1896, and today consists of 30 companies with market capitalizations of more than
$200 billion in a wide range of industries.
Here are the well-known Apple Microsoft Visa Johnson & Johnson
It includes these global companies we often hear about, like Wal-Mart.
Companies included in the Dow Jones Indices are selected by Dow Jones Corporation,
and the company is confirmed every year by reflecting market changes as needed.
So, in the past, the transportation rail energy company represented Dow Jones.
But now, it includes not only IT companies such as Apple and Microsoft, but also
various industries such as financial distribution.
In 2020, United Technologies merged with Raation to become Raytheon Technologies.
In June 2018, General Electric, a company founded by Edison, who had been in the
position since the beginning of 1896, was removed from the Dow Jones magazine
in June 2018.
The S&P 500 Index is a stock index of 500 stocks selected by Standard & Poor's of
the United States in consideration of the size and liquidity of companies.
This indicator is a representative indicator of the US market, and the most used
indicator is selected from stocks listed on the New York Stock Exchange or NASDAQ.
It consists of 400 industrial items, 40 financial items, 00 40 items, and 20 transportation
items.
The index is calculated based on the average market capitalization from 1941 to 1943.
The number of companies included in the index calculation is far greater than that
of the Dow Jones Index, and since the index is calculated based on market capitalization,
the volatility of large companies is more reflected in the index.
The market capitalization of the S&P 500 is approximately 80% of the market
capitalization of the US market.
Stocks in the top group include companies such as Microsoft, Apple, Amazon,
Facebook, Alphabet, Berkshire Hathaway.
If we break down the 500 stocks by industry, it consists of it 25%, healthcare 14%,
finance 1%, telecommunication 11%, consumer 10%, etc.
In order to be included in the S&P 500, several conditions must be met.
Must be headquartered in the United States, with a market cap of at least $8.2 billion
in 2020, must have trading volume of at least 250,000 shares over 6 months, and
be profitable for the fourth consecutive quarter.
You must meet these basic requirements to enter the S&P 500.
Even the Dow Jones and the S&P 500 are endless reflections of economic and corporate
performance. So, countless fluctuations are drawn, but from a long-term perspective,
it has continued to grow upward.
Of course, this includes economic crises that come about once every 10 years or
economic variables large and small.
The Dow Jones Industrial Average was 1462 points on January 2, 2010, ten years ago,
and 26,94 points on January 2, 2020. The s&p500 index was 1115 points on January
2, 2010. It was 3257 points on January 2, 2020.
The S&P 500 has grown at a CAGR of 9.7% over the past 50 years, 9.3% over the past
25 years, 11.7% over the past 10 years, and 14.9% over the past 5 years.
In recent years, the rate of growth has been increasing.
The reasons can be divided into three main categories.
The first is the average growth rate of the top stocks. Although it varies every
year depending on the economic situation, the average annual growth rate
of the top 10% of economic activity is 10%, which is the same as the average
annual growth rate of real estate of 10.2%.
The top companies continue to grow by 10%.
Second, among the companies that calculate the S&P 500 or the Dow Jones
Indices, companies that are pushed out of the rankings due to poor
performance are excluded from the index calculation and replaced with
new competitive companies. So, we calculate the index while excluding
companies that are not good at it and only include companies that continue
to do well. So, there is no particular reason for the index to fall.
Third, this is made possible because capital technology returns are
concentrated on the No. In other words, the winner-take-all economic
ecosystem is getting stronger.
If we can create a financial product that accurately tracks the S&P 500, or if we build
and operate a portfolio of 500 stocks that exactly matches the way the S&P 500
calculates the index, there are countless financial products that can yield as much as
the S&P 500. A lot of it has been built and is running.
These financial products are called exchange traded funds, which are called
exchange-traded funds, and anyone can buy and sell them as if they were trading stocks.
You know Warren Buffett. Warren Buffett's Berkshire Hathaway is also making large-scale
investments in this way, and US pension funds are operated in a way that invests in excha
nge-traded funds.
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