If you’re going to invest your money, either at home or overseas, it’s absolutely integral that you understand the risks integral to the investment process. A big part of this, obviously, is knowing what’s going on with your money. What exactly are the FTSE and the NASDAQ, and what makes them unique?
Understanding the FTSE
FTSE is the UK’s biggest stock market. The FTSE (Financial Times Stock Exchange) is a British provider of stock market indices and is owned entirely by the London Stock Exchange (LSE).
The FTSE is perhaps most famous for their FTSE 100 Index – a list of 100 companies with the highest market capitalisation operating on the London Stock Exchange. The index is calculated in real time and is published every 15 seconds during trading hours.
Understanding the NASDAQ
The NASDAQ is the National Association of Securities Dealers Automated Quotations. The NASDAQ is the second largest stock market in America, after the New York Stock Exchange (NYSE), though its fame comes from the fact that when it began trading in February 1971 it was the world’s first electronic stock market. This was a turning point in the history of the stock market, helping reduce the spread that investors saw when buying and selling.
Interestingly, in 1992, the NASDAQ and the LSE joined together to form the first intercontinental linkage of securities markets. In 2006 the NASDAQ then became a licenced national securities exchange, instead of simply just a stock market. In order to enter the NASDAQ, the requirements a company has to meet are simply more stringent than they were before 2006.
The Difference Between the Two
So what’s the difference between the FTSE and the NASDAQ? While the two markets are linked and closely related at times, the primary difference between the two is that the FTSE is concerned with British trading companies whereas the NASDAQ concerns companies licensed to trade in America.
The FTSE gives an overall snapshot view of the financial market in the UK across approximately 99% of the British market. The NASDAQ, on the other hand, is one of several exchanges in America.
While the NASDAQ covers some international companies, the significant majority are American, and the majority of those are technology and growth-based companies (instead of the normal blue-chip companies that you might see on the NYSE). What this means in short is that if the FTSE gives you a snapshot of the British market, the NASDAQ gives you a snapshot of the worldwide technology sector instead.
Different stock markets and stock exchanges cater to different markets around the world. Keeping an eye on these two markets will allow you to see when certain shares are available at a lower price than normal, helping you identify when to buy and sell shares in a particular industry or sector. However, this is a hobby which not everyone has the time to keep up with.
If you’re looking to invest in either of these markets and don’t have the time and energy to keep up with a dozen reports during the working day, it may be worth looking into a discretionary investment management company. A company like this will allow you to enter the market you’re looking to enter, without the commitment of having to watch the FTSE and NASDAQ day and night.