Established in 1950, the Nikkei average is a collection of 225 stocks from the Tokyo stock exchange. These 225 stocks represent every major business sector that trades on the Tokyo stock exchange. Each of these stocks receives an annual review and if they do meet the Nikkei stock exchange standard, the stocks are subject to removal from the average. The Nikkei average represents an excellent gauge of overall market performance of Asian stocks as a whole.
If your business investment needs require a larger Asian stock investment perspective than the Nikkei average, the Nikkei index also includes Nikkei 500 stock average, Nikkei stock index 300, Nikkei JASDAQ average, and Nikkei all stock index. All of the indexes and averages use Asian stocks from the Tokyo stock exchange but have different Nikkei listing qualification requirements. No matter, which Nikkei average or index you follow or invest in, you need to reflect on the following:
1. Know the history of the Nikkei average before investing.
2. Invest in electronically traded funds or ETFs that correspond to the Nikkei average.
3. Use the Nikkei to measure possible activity and trends in other markets.
Action Steps
The best contacts and resources to help you get it done
Study the history of the Nikkei index
The Nikkei average hit an all-time high in December 1989 and has tried to attain those lofty levels since then. Despite this crest in performance and subsequent downturn, the Nikkei average remains a stable performance measure for stocks on the Japanese stock exchange. Investing in any Nikkei stock or Nikkei indices requires an understanding of historical performance.
I recommend: Analyze the past and it will help your business profit in the future. The
Nikkei Net website offers a subscription service on all aspects past, present and future of the Nikkei index. You should also read up on the
Nikkei stock average crash of 1991. The Nikkei bubble resulted in 30,000-point drop in this Japanese stock index.
Diversify your business investments in the Nikkei average
If you want to invest in the Nikkei average, there are electronically traded funds that mirror the activity of this stock exchange. This is a simple way to purchase one investment vehicle related to the Japan stock exchange without having to buy all the individual stocks in the Nikkei average.
I recommend: Compare the various Nikkei ETFs available and choose the fund that best matches your investment needs. There are 37 different Nikkei index funds available and
Bloomberg financial offers a list of these funds. However, if you do want to invest in individual stock from the Nikkei listings, here is list of each stock that constitutes the
Nikkei average.
Use the Nikkei average to gauge the global investing climate
Because the Nikkei average opens a half day ahead of any exchange in the US, an investor can ascertain the investing climate likely to influence domestic markets. If the Nikkei index falls then this could be a precursor for US markets and give the smart investor a head start on his or her daily investing activities.
I recommend: Visit
FreeRealTime.com which offers up-to-the-second updates on the Nikkei average. In addition, to gain an understanding of how the Dow Jones exchange and the Nikkei exchange correlate; you should read a
summarized history of the two exchanges.
Tips & Tactics
Helpful advice for making the most of this Guide
- Understand that no matter how much you endeavor to foresee market activity for investment vehicles like the Nikkei average, past performance in not a guarantee of future results. In other words, do not invest in market without comprehending its inherent risk and the possibility you could lose your business investment.
The official source of Nikkei Average is the Nikkei Average page at Business.com
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