In my previous article, Getting Back To Basics, I explained why long-term investing is a viable strategy for new investors and provided numerous examples of basic investment fundamentals. This week, I aim to build upon those fundamentals by introducing two more investment concepts, diversification and index investing, while also describing how exchange traded funds (ETFs) help investors mitigate risk.
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Getting Back To Basics
Last Friday concluded one of the worst weeks for the stock market in recent memory. The Nasdaq took the largest hit, losing 3.1% for the week (its biggest single week loss since 2001). The S&P 500 finished down 2.6%, while the Dow Jones Industrial Average slumped 2.3%. Inspired by this sharp turn in the market, panicked investors went on a selling spree, specifically towards the end of the week.
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