Now let’s look at two tools that people use to decide whether they want to invest or not — the Dow Jones and the NASDAQ stock indexes. Maybe you’ve heard of them — and that they go up and down. What does that mean?
Well, both the Dow Jones and the NASDAQ indexes are simply groups of very popular stocks. The NASDAQ stocks are mostly in technology, while the Dow Jones includes stocks of very big U.S. companies across many industries.
So when you hear that either the Dow or the NASDAQ is up or down, it means, in general, that a number of popular stocks that people follow are either going up or down. So, for example, if the Dow or NASDAQ are up, that means that generally the very popular stocks are increasing in value.
When you buy shares of a company, you pay a certain price for each share. When you decide to sell the stock, you sell it for more, less, or the same price you paid for it. When you sell the stock for more than you paid for it, then you make money on your investment.
Click the Next button to continue.