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 A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is essentially an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. Thus, the percentage changes is more important that the actually numeric value. For example, knowing that a stock exchange is at, say, 5000 doesn't tell you much. However, knowing that the index has risen 30% over the last year to 5000 gives a much better demonstration of performance. The plural of index can be spelled either indexes or indices. |
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 The Standard & Poor's 500 is one of the world's best known indexes, and is the most commonly used benchmark for the stock market. Technically, you can't actually invest in an index. Rather, you invest in a security such as an index fund or ETF that attempts to track an index as closely as possible. |
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 Index Investing Tutorial - Get to know the most important market indexes, and the advantages and disadvantages of investing in them. A Market By Any Other Name - The term "the market" is often used as though it has only one meaning, but there actually several indexes representing different markets. Indexes: The Good, The Bad And The Ugly - Indexes are good for tracking market trends, but these tracking devices are not perfect, so you need to determine just how much you can rely on them. The Relative Valuation of an Equity Price Index - A paper by Ruben Cohen that discusses a new method for assessing the value of an equity price index relative to its underlying earnings. |
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