[Tom]

Hello everyone, I’m curious about the popularity discrepancy between the S&P 500 and Nasdaq indices, despite the Nasdaq historically offering better returns. While the Nasdaq has outperformed the S&P 500 in recent years, the S&P 500 remains more widely recognized and popular among investors.

I’m interested in hearing your thoughts on this matter. Why do you think the S&P 500 continues to be favored over the Nasdaq, even though the latter has shown better returns? Are there specific factors or advantages that contribute to the S&P 500’s enduring popularity?

If you have any insights or opinions on this topic, I would greatly appreciate your input. Your perspectives could provide valuable insights into the dynamics of these two prominent indices and help deepen our understanding of investment preferences.

Thank you for taking the time to share your thoughts and expertise!

[Ben]

Well it’s probably because S&P is a better representation of the overall market then the nasdaq. And the Nasdaq has the better returns but also more painful downturns.

[Katie]

Can someone explain the Nasdaq and S&P500 like they’re explaining it to a 5th grader?

[Don]

Very good comments on this thread. Hope people are listening and learning.

[MT.Ailuropoda]

Return is not everything. Look up risk-adjusted return. CAGR, standard deviation, Max Drawdown, Sharpe Ratio, Sortino. These are all components of an investment decision.

[Richard]

What does better mean to you? Popular doesn’t mean better. Not just stocks, but ANYTHING.

The highest percentage gained stocks out there are penny stocks that 96% of us never heard of.

[Dave]

Nasdaq is a fantastic index with epic returns but it can also inflict some real pain.

• 2000 -37%
• 2001 -33%
• 2002 – 38%
• 2008 -42%
• 2022 -33%

Still is one of my largest holdings (besides S&P500) , it’s had some very good years as well.

[Vincenzo]

Because is more diversified since it includes 500 companies from various sectors while the Nasdaq includes 100 companies from the tech sector. But I personally still prefer investing in the Nasdaq because of better returns.

[Andy]

The Nasdaq is mostly tech sector focus on growth while the S&P500 is a lot more diversified.

[Vincenzo]

And take a look at the expenses for QQQ vs VOO, then another look at the dividend…this with the volatility of NASDAQ, I’d prefer SnP, but just my humble, and vastly uneducated opinion.

[Lauren]

S&P are the top 500 companies in America. Offering greater ability than NASDAQ, but greater diversity than the Dow 30.

Nasdaq has a lot of companies that are funding growth through debt. They’re very interest sensitive, but more likely to reinvest in growth as opposed to dividends to share holders. Therefore returns are more volatile on both the up and downside depending on where interest rate policy sits.

[Andrew]

Popular for what? Neither conveys the full picture of the market in its entirety. S&P large cap, nasdaq tech heavy. However they are useful indicators. S&P is a better indicator of overall market performance. Popular for what though? If you mean an index fund to hold depends on your goals/investment style

[Al.Soltura]

Volatility. It’s more of a rollercoaster. If you have a long time horizon, I am of the opinion that one take more risk. Especially inside a Roth IRA.

[Author]

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