Наверное, каждый хотя бы один раз в своей жизни I heard about world indexes. What are they? What are they used for? How are world indices counted? These and other questions will be answered in this article.
general information
Для начала давайте рассмотрим, что же собой represent world indexes. So called indicators of price changes of a certain group of securities. On what grounds do they combine? Drawing an analogy, we can say about the stock portfolio, which are combined according to one attribute (owner, industry, and so on). When a certain index is compiled (or it is being studied), it is of the greatest importance from which securities it was formed. Due to this, a set of stocks and bonds that were entered into it, you can conduct a study of the situation on the market. Information can relate to a specific area, as well as to the entire economy. The dynamics of world indices make it possible to judge development in general, since it takes into account a whole set of enterprises, which, as a rule, are very weakly connected (or there is no relationship between them).
What types of these indicators exist? Indices can be classified by calculation method, family, and author. Each type will be considered separately.
Oldest indicators
Initially let's touch the long pastdays The first widespread index was created by Charles Dow in the distant 1884. It was calculated on the basis of quotations of the 11 largest transport companies that were represented on the US stock exchange. In 1896, it was redeveloped and began to reflect the state of affairs of the largest industrial enterprises of the United States of America.
The S & P 500 index is quite famous,which pays attention to the five hundred largest companies in the US in general. It was created in 1923, but the modern version appeared in 1957. These two are recognized for the main world indices due to the high accuracy of the processed data, although they are primarily aimed at the United States. Why is that? The fact is that the largest number of the largest companies as a percentage is located in the United States. And the enormous influence of this state on the entire planet and pushes many to recognize the Dow and S & P 500 as the main global stock indices that show the emerging trends.
What are they needed for?
If we consider the general case, then the indicesthe world are indicators by which investors can characterize for themselves the speed and general direction of movement of companies in a particular industry or the entire economy. Given this data, decisions are made about where to invest the money. Changes can also inform about the impact of certain events.
Let's look at a small example.Suppose that there is a rise in oil prices. What then will be on the stock exchange? The value of companies that produce oil will also start to grow. This, of course, is a very simple and primitive example, but it gives an understanding of what things indices allow us to judge. Earlier it was said about the types of indices. Let's return to them again.
Calculation methods
One of the oldest includes searchingarithmetic mean. If we talk about global stock indices that used this approach, then we should mention Dow Jones. It was calculated at weighted average stock prices. But over time, the imperfections of this method became apparent. Most significantly to themselves let know that the companies issued a different number of shares. As a result, the real state of affairs was significantly distorted. True, there are also pluses, because such indices are distinguished by simplicity of calculation and the speed of reaction to fluctuations in the price of stocks and bonds. As a result, when a crisis sets in, they learn about it very quickly.
An alternative to this approach is to usearithmetic average weighted value. An example is the Value Line Composite Aithmetic Index. In this case, the price of each share is multiplied by a certain coefficient corresponding to its share in the total value of the index.
The last approach that is distinguished is the search for a geometric mean. An example is the FT 30.
Index families and producers
Such a concept is introduced for indicators thatcalculated by one organization. As an example, we can recall the Standard & Poor’s rating agency, which assesses not only the 500 largest companies, but even the countries. Individual exchanges have their own families (NASDAQ, MICEX, RTS, DAX 100 Sector Indexes and many others). Regarding manufacturers, it can be said that they can again be agency when the corresponding organization is engaged in their compilation. They are also formed by individual exchanges.
Conclusion
World indices are an important tool.investment activities of a large number of people and organizations. If we talk about the position of the Russian Federation, then there should be two characteristic features:
- The Russian Federation is not yet a country where key global players are located.
- Due to EU and US sanctions policyThere has been a trend, according to which, rating agencies and stock exchanges are starting to create new indicators that do not include the state of affairs in the Russian Federation. Officially, this is aimed at protecting investors from the influence of a country that is in partial international isolation, and investing in risky assets.
World indices can be useful even for people who are only planning to collect their investment portfolio in order to have more opportunities for a free life in the future.
