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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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.
NASDAQ and Tech's Rise
- The NASDAQ, the second-largest stock exchange, was created in 1971 as a fully electronic exchange, appealing to tech companies.
- The NASDAQ Composite tracks thousands of companies listed on the exchange.
Stock Market Dynamics
- When you buy a stock after the IPO, the money goes to another investor, not the company.
- Stocks represent fractional ownership of a company, and exchanges facilitate trades between investors.
