I have mentioned several big companies in this series. By ticker symbol, those would be Google (GOOG), Intel (INTC), Microsoft (MSFT) and Nokia (NOK). Some people will notice that Nokia does business from Espoo, Finland. Therefore, the NOK ticker symbol refers to Nokia’s American Depositary Receipt (ADR), and the ticker symbol would differ on markets outside the US.
Investopedia is a handy way to look up investing jargon on line that I either fail to define or fail to define clearly enough. Investopedia is one of many research tools available for free on line. I will be giving out links to these tools from time to time, but for now I’ll add that many online brokers have some research tools available to anybody who surfs in, as well as others available only to people who have a brokerage account.
One common tool is an engine to look up ticker symbols by the name of a corporation or even a keyword. Outside of brokerages, you can look up ticker symbols courtesy of The Wall Street Journal, Yahoo, MSN Money, Google, and Bloomberg. This list is not exhaustive, and all of these sites contain plenty of free and useful information in addition to ticker symbols.
Mutual funds and ETFs also have ticker symbols. Although you seldom see them scrolled across the bottom of your TV, you will use the ticker symbols when you trade the funds and they make great shorthand labels when discussing the funds. I will give examples of ETFs that are currently in my portfolio.
AGG is a bond fund that represents all investment-grade bonds sold on US exchanges.
RING is an equity (stock) fund that represents most of the publicly traded gold miners in the US or that trade in the US though ADRs.
EWC is an equity fund that represents stocks traded on the Toronto Stock Exchange, which is to say all the major publicly held corporations in Canada.
DGS is an equity fund that represents small businesses in “emerging markets” that pay dividends. “Emerging markets” are countries just advanced enough to have their own banking systems and stock markets. “Small,” in this context, means having a market capitalization (stock price x number of shares outstanding) of between $300 million and $2 billion.
ETFs and mutual funds may represent stocks or bonds, geographical area, capitalization, commodities (precious metals, crops, oil), real estate, or even market volatility. The funds may be long (expecting the underlying assets to go up) or short (expecting the underlying assets to go down). Instead of “expecting,” it might be more to the point to say “wagering on.”
The simplest ETFs, and the ones with the lowest expense ratios (management fees), are “index funds.” They are “passively managed,” meaning that a computer could do it and probably does. You can use an index fund to own all the stocks traded on the New York Stock Exchange and the NASDAQ (VTI) or in the Dow Jones Industrial Average (DIA, IYY). A common index that is almost synonymous with the general health of the market is the Standard & Poor’s 500, which is tracked by IVV, SPY, and VOO. Here is an article from The Motley Fool, another valuable website for rookies, meant to explain the advantages of index funds to teenagers.
You cannot beat the market with an index fund because what you are buying is the market. In order to beat the market with ETFs, you would need to use sector ETFs and rotate them according to the business cycle, a tactic outside the scope of this discussion.