On March 2, 2015 the Nasdaq Composite Index, more commonly referred to as the NASDAQ, closed above 5,000 points for the first time in fifteen years. As this occurred, Wall Street trading floors swelled with the collective anxiety of investors who had observed the same milestone during the Dot-Com era (in March 2000). Only two days after the NASDAQ eclipsed 5,000 on March 9th, the tech-oriented index began its dramatic collapse.
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Momentum Investing
Technology stocks, once the darlings of Wall Street, are now facing intense investor scrutiny. Over the last three months, key tech stocks, such as Twitter (TWTR), Netflix (NFLX), and Amazon (AMZN), experienced significant declines in their stock prices. Twitter is down more than 44%, Netflix is down nearly 20%, and Amazon is down about 17% (all since March).
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Beating The Odds
In my previous article, Getting Back To Basics, I explained why long-term investing is a viable strategy for new investors and provided numerous examples of basic investment fundamentals. This week, I aim to build upon those fundamentals by introducing two more investment concepts, diversification and index investing, while also describing how exchange traded funds (ETFs) help investors mitigate risk.
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Getting Back To Basics
Last Friday concluded one of the worst weeks for the stock market in recent memory. The Nasdaq took the largest hit, losing 3.1% for the week (its biggest single week loss since 2001). The S&P 500 finished down 2.6%, while the Dow Jones Industrial Average slumped 2.3%. Inspired by this sharp turn in the market, panicked investors went on a selling spree, specifically towards the end of the week.
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