| | | | Ever notice how mainstream financial news — the CNBCs and Bloomberg TVs of the world —sometimes just leaves you feeling more confused than before?
Sure, they’re throwing numbers and tickers around, but they’re often quoting things in a way that doesn’t actually tell you what’s happening in the market.
Today and over the next few days, I’m going to break down a few big reasons why I don’t trust mainstream financial news for real insights.
For now, let’s start with how they talk about the Nasdaq.
When these shows talk about “the Nasdaq” on TV or the radio, they’re almost always quoting the Nasdaq Composite.
They’ll tell you, “The Nasdaq is up this much,” or “The Nasdaq is down this much.” But here’s the thing: they’re using the wrong Nasdaq.
The real action in the market is in the Nasdaq 100, not the Composite.
The Nasdaq 100 – that’s the QQQ symbol you might be familiar with or /NQ if you’re trading the actual futures — it’s what moves the market, not the full Composite.
But instead of giving you the Nasdaq 100 number that actually affects trading, these shows quote you the Composite, which includes thousands of stocks.
It’s like they’re giving you the average temperature across the whole country, instead of telling you what it’s actually like in your neighborhood.
Quick context for anyone who’s not as familiar with these indexes. The Nasdaq Composite (COMPX or $COMPX depending on your platform) is made up of almost all the stocks that trade on the Nasdaq exchange — thousands of them, in lots of different industries.
But the Nasdaq 100 is just that — the top 100 companies on the Nasdaq, mostly made up of the big tech players that everyone knows.
These are the companies that drive the real action. But financial news? They’ll have you confused, giving viewers the broader Composite instead of focusing on the Nasdaq 100.
This is why I’m telling you — they’re not giving you the info you actually need.
When you’re trying to understand what’s going on in the market, that Composite number is going to leave you scratching your head.
And that’s just the beginning. Tomorrow, I’ll break down another issue I’ve got with how they talk about the Dow — and why what they’re telling you isn’t what you might think it is.
— Geof Smith
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