What is the Nasdaq Composite?
The Nasdaq composite, founded in 1971, is a broad based market capitalization weighted index tracking more than 3,000 stocks. While it has representation from all industries, the index is most predominately known for it’s exposure to the technology and biotechnology sectors and therefore does not represent an accurate view of the entire marketplace. It has many growth companies with lower market capitalizations and therefore trades with higher levels of volatility than the other benchmark indices such as the DJIA and the S&P 500. The Nasdaq composite trades more volume than any other market index in the world. A majority of the stocks from the technology boom in the late 90’s were part of the Nasdaq Composite; therefore, when the market subsequently crashed, the Nasdaq took the hardest hit, dropping nearly 80% from its peak.
