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LSDefine
Simple English definitions for legal terms
market average
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A quick definition of market average:
Market average: A term used to describe the price level of a group of stocks. It helps investors understand how well the overall market is doing. Think of it like the average grade in a class - it gives you an idea of how everyone is doing as a whole.
A more thorough explanation:
Market average refers to the price level of a specific group of stocks. It is a benchmark used to evaluate the performance of individual stocks or portfolios.
For example, the S&P 500 is a market average that tracks the performance of 500 large-cap stocks listed on the US stock exchanges. The Dow Jones Industrial Average is another market average that tracks the performance of 30 blue-chip stocks.
Investors use market averages to compare the performance of their investments with the broader market. If their portfolio outperforms the market average, it is considered a good investment. If it underperforms, they may need to re-evaluate their investment strategy.
Overall, market averages provide a useful tool for investors to gauge the health of the stock market and make informed investment decisions.