What is the Nasdaq?

Cheat Sheet:

  • Stands for National Association of Securities Dealer Automated Quotations.
  • Composed of all the stocks on the Nasdaq market – more than 5,000.
  • It is the main benchmark index for U.S. technology stocks.
  • Largest electronic equities exchange in the U.S.

We have already touched on two of the major indexes: the S&P 500 and the Dow Jones Industrial Average. Now it is time to tackle another popular index: the Nasdaq. The Nasdaq is short for the National Association of Securities Dealer Automated Quotations, which doesn’t exactly roll off the tongue. So they shortened it to NASDAQ. 

Unlike the New York Stock Exchange, the Nasdaq is not located on a physical trading floor and was the first fully-electronic stock exchange. The exchange’s dedication to championing technology attracted tech companies so that when it came time for these big tech companies to issue IPOs, they chose to list with the Nasdaq. Because of this fact, it is the main benchmark for technology stock in the U.S.

If you want to invest in the stocks that make up The Nasdaq, you don’t have to buy all of the different stocks separately. Rather, you can invest in an ETF that tracks The Nasdaq index. A few popular ETFs are Power Shares QQQ ETF (QQQ), Fidelity NASDAQ Composite ETF (ONEQ), and First Trust NASDAQ Technology DIV ETF (TDIV).