We Study Billionaires - The Investor’s Podcast Network TIP437: Why Does The Stock Market Go Up? w/ Brian Feroldi
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Apr 8, 2022 
In this enlightening conversation, financial educator Brian Feroldi, a writer for The Motley Fool, breaks down concepts from his book, 'Why Does the Stock Market Go Up?'. He explains the power of compounding and the significance of stock market indices like the S&P 500 and NASDAQ. Feroldi discusses why the stock market tends to rise over time and dives into valuation metrics, including the P/E ratio. He also shares fascinating insights on the origins of the 401k, making complex financial concepts accessible and engaging.
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Sally's 401k Success
- Sally invested $400 monthly in her 401k for 40 years, totaling $192,000.
- At retirement, her 401k held $3 million, 15 times her investment, showcasing compounding's power.
Dow Jones Origins and Significance
- The Dow Jones Industrial Average, created by Charles Dow and Edward Jones, initially averaged 12 companies' stock prices.
- It now includes 30 companies and serves as a stock market indicator, though percentages offer better context than points.
S&P 500: A Superior Index?
- The S&P 500, created to compete with the Dow, tracks 500 companies and weights them by market capitalization.
- This makes it different from the Dow, which uses price weighting, making the S&P 500 more representative of the broader market.
