Learn To Invest

What is S&P 500?

Pinterest LinkedIn Tumblr

If you’re with Orca, you’re an investor, and as an investor, you’ll likely ask yourself two questions for the rest of your investing life. The first one is: what’s happening on the market? (Options: we’re soaring into a bubble; we’re plummeting into an abyss; we’re growing nicely like flowers in the field.) The second question is: how does my chosen stock compare to the market in general? (Options: my stock is lagging behind; my stock is forging ahead; my stock is right in line with the average market growth). Based on both questions, you make your investment decisions. Bet you didn’t think investing was that easy, did you? 

Now, to assess your stock’s performance, you just click on it on the Orca app, and a nice informative chart will show you how it’s doing. But when it comes to the market, how do you know where to look when there are hundreds of stocks to choose from, and all of them are different? Go for the weightiest ones, for the best ones – they’re the core, and they indicate how the rest is going. Look at them as if they were a single entity and analyse their performance as such. Got that? If so, congratulations – you’ve just invented a stock market index. If not, no worries. Just keep reading, and you’ll know what to do in a minute.

The S&P 500 is an index based on the largest American public companies – 500 of them, as you might have guessed. It gathers their stock performance dynamics into an average and shows you that collective result. 

So, if you see the S&P graph trending nicely upwards and reaching all-time highs, you’ll know that the largest 500 companies traded on the US stock market are steadily increasing their market value. All good. 

If, however, you were to look at the S&P performance last spring, you’d see almost a vertical plunge. That’s when the coronavirus hit. Everything stalled, businesses were axed, investors were panicking. Many stocks – even the strongest ones – lost up to 50% of their market value. Those were bad times but life doesn’t stop for bad times.

 

Things have started getting back to normal since then. From the depths of just 2,200 points in March, the S&P 500 has climbed back up to 3,800, beating the pre-virus high of 3.400. You can clearly see that it went through periods of turbulence along the way – but that much is normal, as it is for any other stock. Strategically, we have a relatively balanced uptrend – meaning that global investors are pretty optimistic about the core of the American industry. At the end of the day, even with the virus, recovery is there, and it’s unstoppable. 

Now, while the S&P can serve as a market reference, you can also invest in it, just like a normal stock. For many people, investing in the S&P has certain advantages over investing in individual companies. For example, it can be easier to analyse and predict the performance of the American stock market as a whole – all you need is to keep your finger on the pulse of the strategic direction of the US corporate and economic landscape. Now that recovery is certain, it just comes down to being patient and watching the S&P grow. In terms of managing your investments, it might mean extending the uptrend of the index for a few months into the future, and setting your Take Profit and Trailing Stop at corresponding levels. 

How to invest in S&P in Orca

As you can see, it’s as straightforward with the S&P as with most other market indices, such as the FTSE (we’ll tell you about that one separately). It’s even more so with Orca – the app highlights every step of the process for you, and explains everything you need to know in plain English. 

The S&P is a complex index that covers a multitude of companies from different sectors and has many variations, but you can choose to invest in any particular sector you fancy. And why not? Just type it into the search bar, and Orca will show you all the available options. At your service.  

See you there!

Wait, not yet. First, we want to make sure you’ve got your compass, so you don’t get lost. So here’s the link to our main guide. Yes, we know we’re being a bit like an overprotective parent, but hey Orca is just looking out for you. Enjoy navigating the seas of investment!

There are countless investment opportunities for you to explore and discover long-term benefits. Let Orca be your guide – let’s go!

Remember your capital is at risk and past performance is no guide to future returns.

Download the app. 

Write A Comment

four × three =