Why passive investing often tracks indexes like the S&P 500

In Episode 02 of the Market MakeHer Podcast, we learn what the stock market actually is (with shopping analogies 👜) and how the overall performance of the stock market is measured. In true Market MakeHer fashion, Jess explains these elusive concepts to us in more simplified language, and Jessie stops her to ask questions, define jargon, and break things down in even more relatable terms.
  
And speaking of "fashion" - the theme for today's episode was "hats" (hence the witch hat and Nasdaq bucket hat). We're open to episode theme suggestions, so be sure to send us your ideas for the video version of this podcast. 
 
What we learned in Episode 02:
* What the stock market is and how it is similar to those buy/sell/trade clothing stores (it even has open and closing hours: 9:30 am - 4:00 pm EST)
* What the 3 major indexes are (also called "indices" pronounced in-dih-sees) and how they help us measure the "health" of the stock market - the value of all the stocks.
* Difference between "price weighted" and "market cap weighted"
* Difference between micro-cap, small-cap, mid-cap, and large-cap (these things are not necessary to know right now at a beginner level, but are helpful terms to keep in mind for later)
* What are "points" when we hear that "x" index went up or down "100 points," for example? 
* How do consumers influence the performance of the stock market?
* How does "fiscal policy" (what the government does) influence stock value? And how things like "the U.S. debt ceiling," for example, influence stock prices. 
* The consumers have the power - where we spend our hard-earned money matters ;)
   
Episode 02 - Simplified and Summed Up:
The stock market is a "place" where a collection of stocks are bought and sold. A brokerage firm connects you to this place for you to buy and sell your stocks. The stock market is measured collectively through indexes/indices. Consumers influence sales by deciding where they spend their money, which makes the value of stocks go up and down. Stocks are commonly measured on 3 major indices/indexes (Dow Jones Industrial Average, S&P 500, Nasdaq - the S&P 500 is the best gauge of how the market is performing because it has the most variety) and this is how we get an idea of how the stock market is performing overall. Learning how to measu

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About Us 🌚🌞
Market MakeHer is an investing education podcast taught by a 15-year finance expert to her friend, a beginner investor. Our mission is to demystify the stock market and make financial literacy accessible to all self-directed investors! We teach complex investing topics in a different way - from "Her" perspective.

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Investing involves risk. There is always potential to lose money when investing in securities. Market MakeHer LLC provides educational content and resources for informational purposes only. We are not registered financial advisors & do not provide personalized investment advice. Consult with a l...