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What is a share market index?

December 16, 2022

A share market index is a statistical measure of the performance of a group of stocks or shares in a particular market. It is often used as a benchmark to measure the performance of a particular investment portfolio or to compare the performance of different investments.

There are many different types of share market indices, each of which tracks the performance of a different group of stocks. Some of the most well-known indices include the S&P 500 in the United States, the FTSE 100 in the United Kingdom, and the ASX 200 in Australia. These indices are calculated by taking the average/weighted price of a specific group of stocks and using it to represent the overall performance of the market.

Share market indices can be useful tools for investors because they provide a way to track the performance of a broad range of stocks in a particular market. By comparing the performance of an index to the performance of an individual stock or a portfolio of stocks, investors can get a sense of how their investments are performing relative to the broader market.

It’s important to note that share market indices typically are not investments in and of themselves. They are simply statistical measures and do not represent a direct investment in any particular stock or group of stocks.

“My greatest discovery was that a man must study general conditions, to size them so as to be able to anticipate probabilities.” -Jesse Livermore

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