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29 Sep 08 - 01:46 AM (#2452557) Subject: BS: Dumb Q: What are stock market 'points'? From: Genie It may seem strange, but I haven't had much luck answering this question via Google or other search engines (too much 'noise' in the system), and I think I'll probably get a decent answer sooner here at Mudcat (assuming some of you folkies actually have a day job that pays enough for you to have any dealings with Wall Street). *g* For years I've heard this, that, and the other about the stock market gaining or dropping so many "points," but I have never heard any semblance of what the hell a "point" on the stock market means. If it's percentage points, then it's percentages of what? What's the baseline? If it's not percentages, then what is it? (Yeah, I know, I took Econ. as an undergrad, way back in the Jurassic Period, but if we dealt with this, I apparently slept through it. I'm finally getting around to asking.) Genie |
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29 Sep 08 - 02:54 AM (#2452570) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: CarolC This page explains it, but I don't understand any of it... http://en.mimi.hu/stockmarket/points.html (I Googled with the words, stock market points) |
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29 Sep 08 - 08:13 AM (#2452708) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Mr Red but what are the good points? |
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29 Sep 08 - 09:05 AM (#2452759) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Donuel up is a higher price for a stock. a stock holder of Apple is happy when its 210 and sad when it is 115 They would have to sell high to get the maximum cash value. The volume of stock trades is also important and reflects how many trades are going on. I sold all my stock last year at this time, a bit too early but not too late either. |
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29 Sep 08 - 09:38 AM (#2452787) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Uncle Phil For US stock markets a point is $1US. For example, the Dow Jones Industrial Average that is usually reported in the news is the average price in dollars the stocks for 30 US industrial companys. |
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29 Sep 08 - 09:49 AM (#2452793) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Amos "If a stock is up two points, then it really means that the stock is up $2. Don't confuse points with percentages when talking about stocks. If a $5 stock rises by $2, it has risen two points. Similarly, if a $50 stock rises by $2, it has also risen two points, although the two-point increase is a much greater percentage change for the $5 stock than for the $50 stock." From Mimi Hu's stock market page. A |
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29 Sep 08 - 12:53 PM (#2452976) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Uncle_DaveO With the Dow Industrial Average currently around 1100, a gain or loss of 100 points (or more exactly 110), that's a gain or loss of approximately 1%. Gain or loss of 300 will be around a 3% change. The S&P index and Russell and other indexes are not quite so easily equated to percentage changes, because they are not so close to a multiple of 100. |
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29 Sep 08 - 03:25 PM (#2453126) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Genie Uncle Phil and Amos, your explanation seems very clear. Thanks. I've wondered for a long time why, when there's news or discussion about the stock market on TV or radio, they always seem to assume everyone knows the jargon/terminology. By contrast, when mortgages are being discussed and they refer to "points," the newscasters and reporters and commentators do occasionally explain what "points" mean in that context. But let me see if I've got this right: When they say "Stocks were (or the market was) down 500 points," does that mean the overall loss for the day was $500? (That does not sound like a BFD.) Or does that mean the average stock lost $500 in value? |
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29 Sep 08 - 03:40 PM (#2453136) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: M.Ted The drop in points that sends everyone into a panic is not an individual stock, it is the Dow Jones Industrial Average, which Uncle Dave has mentioned--this is a number that represents the cumulative stock prices of 30 stocks that are considered representative of the market in general, which is called "the broader market" on CNBC-- There are, of course, a lot of problems with judging the health of stock market based on the performance of only 30 of the thousands of stocks that are traded, just as there are problems with judging the health of an economy by the sales of stocks--but hey, they've gotta do something-- |
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29 Sep 08 - 06:05 PM (#2453260) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Uncle_DaveO And when speaking of any of the indexes, those indexes and changes are not mere averages of the prices of the stocks in the index. In at least some of the indexes--notably the Dow--the different stock issues are weighted differently, based on the capitalization of the respective companies. Which is to say that the Dow (for instance) is a mathematical monster, and it's futile to try to relate a given index level or given change to anything in the real world. You just have to take the figures given and relate them to what they have been. Up is usually thought of as good, because most people think of "going long", that is buying low and selling high. Others, of course, hope for the price of a stock to go down, perhaps because they think they can buy a good stock cheaper than it's worth, or maybe because in a particular case, at least, they have "gone short", sold the stock in the hope to buy it back cheaper. Dave Oesterreich |
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29 Sep 08 - 06:29 PM (#2453273) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: GUEST,Jack the Sailor There are several major indexes. The Dow Jones is the most famous. It represents the additions of the stock prices of 30 large selected companies. In the case of the Dow, If the Price of IBM goes up a dollar and every other shock remains the same then the Dow goes up one "point". Today the Dow fell 700 points. that means that the share prices of the 30 big companies among them dropper 700 points. The above is a very poor way to judge the over all health of the market. Other indexes weight their averages factoring in the size of the companies and their level of capitalization. In that case a point does not as closely represent a dollar. In any case the percent change is the most useful indicator. Saying the NasDaq went down 5 per cent is more useful than saying it went down a hundred points. |
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29 Sep 08 - 07:18 PM (#2453300) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: M.Ted "You just have to take the figures given and relate them to what they have been"--of course, the problem with this is that the stocks included in the Dow change-- AIG, for instance, was removed from the index just the other day, (replaced by Kraft, which is puzzling)--beyond that, most of the stocks that comprise the index have been added relatively recently, and only one stock, GE, was on the original index. So when you compare the index over time, what are you really comparing? |
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29 Sep 08 - 09:48 PM (#2453398) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: GUEST,leeneia Google this: Dow Jones Industrial average definition The DJ is the most famous statistic about stock prices. It is based n the prices of 30 huge corporations. There are other averages for smaller stocks, but I forget their names right now. Let's see, Standard and Poors (500 stocks) Wiltshire, Russell... NASDAQ, is there a NASDAQ? |
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29 Sep 08 - 10:02 PM (#2453405) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: GUEST,Jack the Sailor Genie, most of the time, if they are talking about "the market" then they are talking about the Dow Jones. During the tech bubble the NASDAQ was very hot. But it is now not talked about so much. |
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29 Sep 08 - 11:25 PM (#2453452) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Genie Yeah, I wasn't thinking of that when I started this thread, but I know that the financial reports usually do specify "Dow Jones industrial average" ( or "S & P" or NASDAQ). I just never had a good anchor on what a drop of, say, 100 points or 300 points or a rise of a few hundred points meant. I was never sure what sort of scale it was. Today they're talking about a 700-point drop as one of the worst ever. OTOH, it seems the indexes (indices?) can vary widely within a single day - as happened today. |
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29 Sep 08 - 11:34 PM (#2453455) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Stilly River Sage I have an account with Vanguard for my no-load ROTH IRA. It has lost some value, certainly. My contribution later in the week should scoop up more shares because the prices are lower, and that's fine with me. "Buy low, sell high" is still good advice. I'm in for the long haul. When I set this up I chose INDEXED funds, not to be confused with the Indexes you were asking about. They are groups of stocks related by some aspect of the company, and most of mine aren't in mortgage backed securities or banks. They're in other things, and actually, are set to be a little riskier than average. SRS |
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30 Sep 08 - 02:07 AM (#2453495) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Joe Offer Wikipedia has a very good article on the subject. The Dow-Jones Industrial Average was established May 26, 1896, by Charles Dow, editor of the Wall Street Journal. It calculated the average price of a share of stock from the 12 stocks on the list, which was $40.94. The index hit its all-time low of 28.48 during the summer of 1896 - percentage-wise, a far more significant drop than we've had this year. Now, $40 is still a pretty good average proce for a share of stock, but those 1896 stocks have grown so much in value and have split so many times, that the average is now $10,365.45. Of course, very few companies have shares worth ten grand apiece, but that 10,000-point average once was rooted in reality. On October 9, 2007, the Dow Jones Industrial Average closed at the record level of 14,164.53 - that doesn't seem very much of a reality any more. I wish I had taken my money out last October - but then, what would I have done with it? It's certainly true that there are other indexes that are far more accurate, but the Dow is the average people are used to. Since Al Gore privatized me out of a steady government pension, most of my income is from investments and I look at the Dow almost every day. The Dow numbers stick in my head, and I can tell at a glance whether my portfolio is going up or down. So, the Dow is a good tool for telling whether or not I should jump. So far, I haven't jumped. But the short anwser to Genie's question is that a point is a dollar, but the 10,000-point current average only tells us what an 1896 share of stock would be worth today. If you are 112 years old, this may be highly significant to you. For the rest of us, it's a little hard to root those numbers in reality. -Joe- |
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30 Sep 08 - 02:13 AM (#2453497) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Bert Stock market points are just the same as gambling chips. The US. economy would be in much better shape if we used Las Vegas instead of Wall Street as our measure. |
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30 Sep 08 - 04:02 AM (#2453543) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: GUEST,Kevin Parker To follow up on Joe's Comment, and just to give a feel for the size of the money involved. One widely quoted index is the S&P 500. This is based on the market capitalisation (what it would cost to buy the shares) of 500 large US companies from various sectors. These companies all together have a market capitalisation of over $9 trillion! The S&P index was created in 1957, and currently stands at a value around 1500. So on that index, every point loss represents a percentage fall of about 0.067%. That doesn't sound much, but it represents a movement of $6 billion in the market values of those companies. And of course the index is just a sample of all the shares traded in all the companies around, so the 'real numbers' are bigger. cheers KP |
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03 Oct 08 - 02:42 PM (#2456601) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: GUEST,Hu?? A point is $1.00 and represents the cumulative stock prices of 30 stocks. A point is an average based on 100 companies. A point represents the amount of stocks traded. How much more clearer can it be? ????????? |
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04 Oct 08 - 01:52 PM (#2457194) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Little Hawk They don't care if most people really understand it when they tell you about that kind of stuff on the news. All they're really doing is marketing a general sort of mood of motional hysteria (either positive or negative). The bigger the hysteria, the bigger the story. The News is an entertainment and advertising show, not a genuine attempt to keep people informed. It's also a $ySStem propaganda show much of the time too, of course. It depends what they're trying to sell you. If they're trying to sell you a new war or a $700 billion dollar bailout, well, then you can expect some vigorous selling efforts by way of the news media. In the case of a new war, it may involve several years of well-orchestrated marketing before the deal is consummated. |
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04 Oct 08 - 02:59 PM (#2457231) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: GUEST,Jack the Sailor It's Not JUST hysteria LH. Its real money if you are invested. But a problem is that the more people who are investing, the more the stock is worth. The Dow Jones more represents the speculative side of the market rather than any real value of investment. Funny Joe, I had heard that explanation before and forgotten it after more recently hearing the one I put forth. on the other hand, A ten thousand point DO average would only mean an average share price per company of 333 dollars. a 14,000 point dow would mean an average of 500. If they are adding the splits to form one -what if you had held it since issue- equivalent stock. Its not that far fetched even now. But the Dow is certainly odd scale since not all of the companies have the same amount of outstanding stock. Certainly some companies' stock changes affect the Dow a lot more than some others. My question is since the sale of the Wall Street Journal and Dow Jones company, will they now call it the Murdoch Jones average or the Dow Murdoch? |
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04 Oct 08 - 03:02 PM (#2457235) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Donuel For the best understanding of the entire banking system and crisis go to npr.org/this American life and listen to the most recent program. The who from a month ago is also golden. |
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04 Oct 08 - 05:50 PM (#2457330) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Little Hawk Oh, for sure, Jack. It is real money if you have invested in the market. And even if you haven't, there will be shock waves spreading out through the general economy that will probably affect you. |
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04 Oct 08 - 07:44 PM (#2457384) Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Murray MacLeod Subject: RE: BS: Dumb Q: What are stock market 'points'? From: Little Hawk - PM Date: 04 Oct 08 - 01:52 PM They don't care if most people really understand it when they tell you about that kind of stuff on the news. All they're really doing is marketing a general sort of mood of emotional hysteria (either positive or negative). The bigger the hysteria, the bigger the story. The News is an entertainment and advertising show, not a genuine attempt to keep people informed. It's also a $ySStem propaganda show much of the time too, of course. It depends what they're trying to sell you. If they're trying to sell you a new war or a $700 billion dollar bailout, well, then you can expect some vigorous selling efforts by way of the news media. In the case of a new war, it may involve several years of well-orchestrated marketing before the deal is consummated. one of the most perceptive posts ever ... |