P 500 : A Stock Market Index Essay

P 500 : A Stock Market Index Essay

Length: 1013 words (2.9 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

S&P 500 is a stock market index introduced by Standard & Poor. It includes 505 biggest US companies from all industries and covers more than 70% of US total market value. Comparing to Dow, S&P 500 is more representative of the whole market.

The General Trend Shows a Similar Movement Between Gold and S&P500, Except a Few Times
The general understanding toward stock markets and safe heaven assets is that when stock markets underperform, safe heaven assets usually outperform. It may not be entirely true. From a simple point of view, S&P500 has increased from 1400 to more than 2000 over the 16-year span. The gold price has also appreciated from just 277 dollars per ounce to over 1300 dollars over the same period. We may conclude that they move together as they do have a positive correlation, but the longer term analysis can tell us that the reason behind it is the real GDP growth and the strengthening purchasing power of consumers, and businesses also grow through continuous innovation. From the graph, we can see that trend lines how us that they do appreciate together, but there are two very distinct point: one at 2008, and one at 2012. At 2008, the financial crisis led to a collapse of the stock market and SP500 dropped significantly, and gold has move inversely and created a new high. From 2011 to 2013, a couple years most investors deem as the best years for stocks over a decade, SP500 skyrocketed with the gold dropped significantly from its previous high after the financial crisis. The underlying reason for such movements is the risk-aversion apatite investors generally share at a time of crisis and uncertainties, and the risk-on apatite when things are better than previously anticipated. A good example of such effect is when a...


... middle of paper ...


...floating and appreciating in relation to Dollar, gold price has also started increasing at a faster pace. The trend is very obvious that as US dollar becomes cheaper to Yuan, the Gold price increases at an even higher percentage. I cannot definitely say that such correlation is entirely caused by the exchange rate, but some causation is in there undoubtedly.

Underlying Effect of Gold Price
A lot of times, the data would affect the mind set of investors. More precisely, it is the information, or the message, behind the data that actually influence a single investment or the entire market. For example, many people believe that if a company’s earning drops or become negative, its share price would drop as well. However, a lot of times, even when a company’s earning becomes negative but has beaten the analysts’ forecast, its share price would increase because it shows a

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

How The Stock Market Was Doing Essay

- During the first week of this finance project, I did not select to buy or sell any additional stocks. It took me a little while to figure out the charts on Yahoo Finance and see how the stock market was doing. For this reason, I just chose to observe and record my stocks every Monday, Wednesday, and Friday in order to be consistent. I have never invested or even thought about stocks before starting this class. This class was very helpful and informative to me for this case. In an excel spreadsheet, I tracked down the price of each share for each day, as well as the new values in order to see how much money I have lost or gained....   [tags: Stock market, Stock, Share, Investment]

Better Essays
1000 words (2.9 pages)

2016 Investment Strategy On China 's Stock Market Essay

- 2016 Investment Strategy on China 's Stock Market I. Introduction China 's stock market is still an emerging market, not as mature as US stock market. So, there are several factors U.S. investors should consider when making investment in China. (1) Institutional investors are underdeveloped and individual investors account for a large proportion in China’s market. 80% of the trade volume in China’s stock market is from individual investors, while institutional investors account for 70% of the trading volume in the U.S....   [tags: Stock market, Investment, Stock exchange]

Better Essays
1397 words (4 pages)

The Stock Market Essay examples

- The economic conditions were not that favourable during the financial crisis in 1997. Instability in the international financial markets in turn spilled over into the domestic financial markets. Continued waves of adjustment in both the currency and stock markets, coupled with the decline in domestic and export demand subsequently prompted a shift to more growth promoting policies. One of the institutions that affected was Malaysian stock market. In general, Malaysia stock market contributes to the best allocation of capital resources among numerous users....   [tags: Economy, Malaysia, Capital Market]

Better Essays
2023 words (5.8 pages)

Essay on Mutual Fund Cash Flows And Stock Market Performance

- Mutual Fund Cash Flows and Stock Market Performance* During the decade of the 1990’s through the year 2001 there were some major shifts in the deployment of investment assets. Based on a variety of measures, mutual funds grew dramatically as vehicles for investing in portfolios of stock. Specifically net cash flows into equity funds grew from $13 billion in 1990 to $310 billion in the year 2000.1 During that same period the number of equity funds rose from 1,100 to 4,395, while the number of accounts in those funds increased from 22 million to 162 million....   [tags: Economics Stock Investment Cash Analysis]

Free Essays
1802 words (5.1 pages)

How Changes in Oil Prices Affect Stock Market Essay

- Kollias et al (2011) use a non-linear BEKK-GARCH model to see how war and terrorism impact the covariance of the price of oil and four major stock market indices (S&P500, DAX, FTSE100, CAC40). They found that war has a long lasting effect on the covariance, whilst terrorist attacks have a one-off shock to the price of oil, the DAX and the CAC, whilst the S&P500 and the FTSE100 were not significantly affected due to the fact that they are more efficient markets and a deep enough to withstand the consequences of a terrorist attack....   [tags: methodology, returns, crude]

Better Essays
925 words (2.6 pages)

Essay about Index Funds and Mutual Funds

- Personal finance and investing is just that: it's personal. From the day the first shares are bought, for the individual who surmises it's undertaking, the decisions made today will have everlasting impacts on not only the distant future of the investor but the investor's family for generations to come. Combine this with current uncertainty in the stock markets, housing markets and economy and you have effectively driven a wedge between the investor, his income and his family at large. Statistics abound in reference to how poorly managed the majority of American's finances are and it's no wonder with the abundance of securities that are available in today's markets....   [tags: Finance]

Better Essays
970 words (2.8 pages)

Technology And The Stock Market Essay

- The purpose of this research paper is to prove that technology has been good for the stock market. Thanks to technology, there are now more traders than ever because of the ease of trading online with firms such as Auditrade and Ameritrade. There are also more stocks that are doing well because they are in the technology field. The New York Stock Exchange and NASDAQ have both benefitted from the recent technological movement. The NYSE says they “are dedicated to maintaining the most efficient and technologically advanced marketplace in the world.” The key to that leadership has been the state-of-the-art technology and systems development....   [tags: essays research papers]

Better Essays
1256 words (3.6 pages)

The Meaning of the Phrase, Beating the Market Essay

- The Meaning of the Phrase, Beating the Market "Beating the market" is a difficult phrase to analyze. It can be used to refer to two different situations: 1. An investor, portfolio manager, fund, or other investment specialist produces a better return than the market average. The market average can be calculated in many ways (some of which are shady and used to make it look like someone has exceeded market returns), but usually a benchmark like the S&P 500 or the Dow Jones Industrial Average index is a good representation of the market average....   [tags: Beating the Market Stock Markets Essays]

Better Essays
5157 words (14.7 pages)

Are Bull Markets Supported By Rational Growth in Stock Valuations? Essay

- Introduction “The rich get richer” is a frequently heard adage in the United States, a country quickly associated with capitalism. US financial markets make headline news on a daily basis, so people are well aware when the domestic stock market’s indices rise or fall. Given the widespread distribution of information on the stock market’s performance, much excitement can easily be generated during a bull market, broadly defined as a trend during which stock prices are climbing. Does the publicity and excitement surrounding a bull market further perpetuate rising stock prices....   [tags: Finance Financial Economics Essays]

Free Essays
2368 words (6.8 pages)

Job Report And Reaction From The Stock Market, Bond Markets, And The Federal Reserve 's Continued Patience

- Subject This report is to analysis the May jobs report and the reactions from the stock market, bond market, and the Federal Reserve’s continued patience to wait to increase interest rates. In the recent Wall Street articles the May jobs report was released and a 5.5% unemployment rate was an increase from last months 5.4%. The Federal Reserve wants to see more strength in the labor market. The Fed is expecting to see this strength being lead by rising wages. Also, the Fed is looking for signs of income growth to further push the economy’s momentum....   [tags: Central bank, Monetary policy, Great Depression]

Better Essays
728 words (2.1 pages)