Do you want to invest but feel intimidated by all the financial jargon? You’re not alone!
We’re here to help you take the first steps toward building a strong financial future. Our latest video is an S&P 500 crash course. In just a few minutes, you’ll learn what the S&P 500 is, why it matters, and how it can affect your investing strategy.
Transcript
Introduction: Understanding the S&P 500 with Danny Clark
Hi, I’m Danny Clark. In my role as a wealth advisor at Solidarity Wealth, I’m constantly monitoring the stock market. An important part of understanding the stock market is grasping the S&P 500.
What Is the S&P 500? A Simple Explanation
Lots of people have heard of the S&P 500 index, but not many people fully understand what it is. Today, I’d like to explain in simple terms what it’s about and why it’s so important. So, what is the S&P 500 exactly? It’s basically a blend of about 500 major US companies all rolled into one index.
The Companies and Sectors That Make Up the S&P 500
Here’s an image that shows some of the companies and sectors that make up the index. These companies aren’t randomly chosen; they’re carefully selected to represent 11 different sectors of the economy. They make up roughly 80% of the value of the entire US stock market.
Why the S&P 500 Is a Bellwether for the Market
The S&P 500 is a bellwether for how companies are performing, giving us an idea of how the market is doing overall.
How Is the S&P 500 Calculated?
You might be wondering how the S&P 500 is calculated. Rather than guesswork, its value is calculated based on market capitalization. That means each company is weighted differently based on its total market value.
Large Companies Versus Small Companies in the Index
Here’s an example. A large S&P company worth hundreds of billions of dollars, like Apple, carries a lot of financial and political clout in the index. Compare this to a smaller company like Etsy, which is worth less than Apple and has much less weight overall in the index.
The Importance of the S&P 500 in the US Economy
So why is the S&P 500 so important? A lot of its importance stems from its longevity. The index has shown how resilient the US economy can be through periods of great volatility, such as the tech boom and bust, the housing market crash, the Great Recession, and the recent pandemic-induced volatility.
Lessons Learned from the S&P 500’s Resilience
Through it all, the S&P 500 illustrates how companies evolve, expand, and stumble in an ever-shifting market. It provides valuable insight to help investors like me make educated investment choices.
How the S&P 500 Can Be a Valuable Tool for Investors
The fact is, the S&P 500 can be a valuable tool for many investors. Whether you’re new to the investment world or a seasoned investor, professional wealth managers at Solidarity Wealth can integrate insights from the S&P 500 into your portfolio.
Ready to See What Wealth Management Can Do for You?
Reach out to us at info@SolidarityWealth.com or call 385-374-1665 to schedule a discovery call.
