What is Nasdaq 100?

What is Nasdaq?

What is Nasdaq? Nasdaq is the National Association of Security Dealer Automated Quotations(NASDAQ) is an electronic marketplace to buy and sell securities. It was launched by the National Association of Security Dealers (NASD) after the Security Exchange Commission(SEC) urged NASD to automate market securities not listed in the exchange. Also, a company must be registered with the SEC, with at least three market makers, and should meet the minimum exchange requirement before being listed for Nasdaq. 

Moreover, Nasdaq officially separated from NASD and began to operate as a national security exchange in 2006, with its headquarters in New York. Also, it runs 29 markets enabling trading of stocks, derivatives, and commodities in the U.S.A.; it offers several benefits such as transportation, good IT facilities, education assistance, long-term disability insurance, etc. 
 

History of Nasdaq-100

NASDAQ, the stock market index, was founded in 1971 but was launched in 1985 in the United States was the first index that brought trading online by focusing mainly on technology-based companies like Google and Oracle. Initially, it acted solely as a quotation platform and did not provide access to any actual trading. With time NASDAQ-100 has become one of the most important online trading platforms. Moreover, its composite index has been published since its foundation. 

Furthermore, with evolution and technological advancements, various technology companies became a part of the Nasdaq, leading to a rise in its value from 1000 in 1995 to 4,500 in 2000. Since then, Nasdaq has grown to operate in 25 markets.
 

Reason to Create Nasdaq-100

Nasdaq-100 and Nasdaq composite index, both composed by NASDAQ, promote themselves in the New York stock exchange and enable investors to buy and sell stocks with an automatic, transparent, and speedy computer network. Also, it includes only companies from the non-financial sector, including pharmaceuticals, biotechnology, retail, and technological corporations. In other words, Nasdaq was created to monitor all non-financial companies listed on this index. Moreover, the NASDAQ-100 index started with a base point of 250 but closed at almost 800 by the end of the year 1993. 

Nasdaq-100 all Time Peak

●    All time peak of the Nasdaq-100 was above 4,700, set in the year 2000 at the height of the "dot-com bubble."

●    After the impact of the September 11, 2001 attack, it took Nasdaq 5 years to recover and reach the height of 2,239.51 on October 31, 2007.

●    Despite global market crises, Nasdaq-100 managed to reach a high again, followed by the election of the U.S.A in the year 2017.
 

Nasdaq-100 all Time low

●    In the year 2002, the recession, the attack of October 11, 2001, and the subsequent war of Afghan negatively impacted the Nasdaq-100 index and led to a fall of the 900-point mark.

●    After reaching its height in the year 2007, the fate of investment and late global crises in 2008 led to a major downfall in the Nasdaq-100 index as a price decline of 20% or more over at least 2 months.

●    Till the end of the year 2008, the Nasdaq companies, with many others, experienced a downfall and reached their lowest point of 1,108 in over 6 years.
 

Investing With Nasdaq-100

NDX is the abbreviation of the Nasdaq-100 index, and it was the most actively traded security in the U.S.A. in the year 2000. However, it has since dropped to being within the top five after other stocks. As it has a tech-heavy portfolio, performance depends upon technology stocks. 

Moreover, being a part of the Nasdaq-100 index is more popular and cost-effective than buying individual shares. Other than classic  ETFs such as QQQ by Invesco, there are also leveraged ETFs, and some of them allow you to bet against the index. Some of the important ETFs of Nasdaq-100 are Pro share ultrapro QQQ, Proshare Ultra QQQ, and Invesco QQQ. So, if you want to invest in a tech-heavy portfolio and don't mind taking a risk, you can consider the Nasdaq-100 index for investment.
 

Criteria of Nasdaq-100 for Companies

Nasdaq has some strict standard requirements that a company must fulfill before being listed for it, and these requirements include:

a.    A company must have a daily average of 200,000 shares. 
b.    It must not be involved in any bankruptcy activity.
c.    These companies must be exclusive to Nasdaq in either the global select or global market tier. 
d.    Before 2014, companies were not allowed to have more than one stock on Nasdaq, but now they can include multiple classes.
e.    It is important to be current concerning annual and quarterly reports. 
 

Weighting in Nasdaq

The index of Nasdaq is calculated using a modified market weighting; the index value is the total of the index share weight. Also, the index share weight is calculated by multiplying the number of shares by the last trading price and then dividing by the index's divisor. Additionally, this divisor will help scale down the index's aggregate value to a lower level.

Moreover, the index is calculated in three versions, i.e., price return, total return, and notional net total return index. While the price return is calculated without considering any dividend, the total return considers the reinvestment of cash dividend on the ex-dividend date. 

Although companies with large markets tend to influence the index, its value is modified to keep any issue of the overwhelming effect on index results. However, the companies are limited to having a maximum of 24% of the index's total weight. 
 

Composition of Nasdaq

Nasdaq-100 is a market index for companies from all companies excluding the financial sector, such as technology companies account for 56% of the index. Other than these, companies that provide consumer services, like Amazon, Walmart, Starbucks, etc., account for 22% of the index, and healthcare companies have 6% of the share in the index. The remaining 12% share is accounted for by consumer goods and industrial companies.

                 Industry                                                                              Composition

Furthermore, it covers 3000 stocks listed in the Nasdaq stock market, and its composite simply represents the value of all listed stocks.. 

Conclusion

The Nasdaq-100 is created as a meter to measure and monitor future progress. Also, it is one of the highest-performing stock market indexes. It allows investors to invest more volatilely, with high growth security and access to shares, futures, ETFs, annuities, and options, compared to exchanges that offers more stable companies. 

Other than this, Nasdaq also offers dedicated customer service and security. Also, it provides a tool that makes it easier to view your trade history, price charts, management of auto investments, and make conversions with lower listing fees. And, it turns out to be more profitable With its evolution, thus, to gain more profit opportunities, you can consider investing in the Nasdaq-100 index to gain more profit opportunities. 

Therefore, if you are someone looking for reasonable returns  and to avoid risk then Nasdaq is a great choice for you.