FMP
Jan 4, 2024 5:54 AM - Parth Sanghvi
Stock Market Indexes serve as crucial barometers of market performance, reflecting the collective movement of stocks within a particular market or segment. The construction of these indexes involves intricate methodologies, diverse weighting schemes, and meticulous considerations for market representation.
Companies with larger market capitalizations exert more influence on cap-weighted indexes. This is beneficial in reflecting the market's view on the largest companies.
Equal-weighted indexes can offer a more diversified representation across the market. They may provide a different perspective by giving smaller companies a greater influence.
Sector Representation:
Geographic Diversity:
Some modern indexes incorporate factor-based methodologies. These consider specific attributes like volatility, value, momentum, or quality to construct indexes, aiming for better risk-adjusted returns.
Some indexes use dynamic weighting strategies, adjusting stock weights based on factors such as liquidity, earnings, or market trends.
Understanding stock market index construction involves recognizing the nuances of different methodologies, weighting schemes, and the significance of market representation. Investors leverage these indexes to assess market trends, benchmark performance, and formulate investment strategies.
Sep 11, 2023 1:38 PM - Rajnish Katharotiya
Price to Earnings is one of the key metrics use to value companies using multiples. The P/E ratio and other multiples are relative valuation metrics and they cannot be looked at in isolation. One of the problems with the P/E metric is the fact that if we are in the peak of a business cycle, earni...
Sep 11, 2023 1:49 PM - Rajnish Katharotiya
Price-to-Earnings ratio is a relative valuation tool. It is used by investors to find great companies at low prices. In this post, we will build a Python script to calculate Price Earnings Ratio for comparable companies. Photo by Skitterphoto on Pexels Price Earnings Ratio and Comparable Compa...
Oct 17, 2023 3:09 PM - Davit Kirakosyan
Shares of VMware (NYSE:VMW) witnessed a sharp drop of 12% intra-day today due to rising concerns about China's review of the company's significant sale deal to Broadcom. Consequently, Broadcom's shares also saw a dip of around 4%. Even though there aren’t any apparent problems with the proposed solu...