Reference

Start With the Essentials

The benchmarks and institutions every investor should understand first.

What’s the difference between the S&P 500 and the Dow Jones?

The S&P 500 tracks 500 large-cap U.S. companies weighted by market capitalization — bigger companies have more influence. The Dow Jones tracks just 30 blue-chip stocks weighted by share price, which means a $300 stock moves the index more than a $50 stock regardless of company size. The S&P 500 is the better benchmark for the overall U.S. stock market. The Dow gets more headlines but is less representative.

Can I invest directly in an index?

Not directly — an index is just a measurement. But you can buy index funds or ETFs that track an index almost exactly. For example, SPY and VOO both track the S&P 500, and QQQ tracks the Nasdaq-100. These funds hold the same stocks in the same proportions as the index, so your returns will closely match it (minus a small expense ratio). Our best S&P 500 ETFs guide compares the top options.

What are the 11 GICS sectors?

The Global Industry Classification Standard (GICS) divides all publicly traded companies into 11 sectors: Technology, Healthcare, Financials, Consumer Discretionary, Consumer Staples, Energy, Industrials, Materials, Utilities, Real Estate, and Communication Services. Each sector has distinct drivers, risk profiles, and economic sensitivities. Our individual sector guides above break down what drives each one, the key companies, and how they behave in different market environments.

What does the VIX tell you?

The VIX measures expected volatility in the S&P 500 over the next 30 days, derived from options prices. When the VIX is low (below 15), markets expect calm. When it spikes (above 30), it signals fear and uncertainty — historically a contrarian buying signal. It doesn’t predict direction, only the magnitude of expected moves.

Why should I care about stock exchange differences?

For most investors, the exchange doesn’t matter much — your broker routes orders automatically. But it matters for understanding market structure: the NYSE uses a hybrid model with designated market makers, while Nasdaq is fully electronic. Different exchanges specialize in different products — CBOE for options, CME for futures. If you trade options or futures, or invest internationally, knowing which exchange you’re dealing with helps you understand liquidity, trading hours, and regulation.