Which Stock is the best to buy

S&P (Standard & Poor’s) 500 Index includes 500 publicly traded companies in the U.S. It’s a market cap weighted index (not 500 largest market cap companies) includes various criteria. This is a gauge for how American equities’ overall performance. This index was launched in 1957 and has the most diversity based on its selection.

S&P 500 uses a weighting method which give higher weight to companies with larger market cap.
Weight = Company Market Cap/ Total all Companies’ Market Caps

To calculate the company’s Market Cap, you use the company’s stock price x its outstanding shares. For example, stock “AMD” (Price is $150/share, there are 1.6B outstanding shares. 150 x 16,000,000,000 = 240,000,000,000 (240Billion)).

S&P 500 doesn’t stay the same, it’s rebalanced based on the companies market cap changes.

If you utilize S&P 500 as your gauge to measure the market and compare your returns and if you want to invest with these 500, SPY (ticker for SPDR S&P 500 ETF) would be a good choice because S&P 500 is an index not a stock, but SPY represents those 500 companies and it’s an ETF that you can invest with.

SPY: 5 Yr return: 87.9%;
SPY: 3 Yr return: 24.72%
SPY: 1 Yr return: 27.24%

What about Down Jones Industrial Average Index or Nasdaq Index?

Down Jones (DJIA) is associated with the industrial equities and gives a higher weight not buy Market Cap, but by Stock Price. A Higher Stock price will give the company a high weight. Comparing to S&P 500’s Market Cap-Weight, DJIA is a Stock Price-Weight index.

Nasdaq is a global electronic marketplace for trading stocks. There are several indices: Nasdaq 100 index (100 largest commonly traded equities); Nasdaq Composite Index; Nasdaq Global Equity Index (NQGI). The ticker QQQ lines up with Nasdaq.

Vanguard 500 is another index Fund that tracks the performance of the S&P 500 index by investing all of its net assets in the stocks that make up the index and hold each company with equal weight as the S&P. This fund almost mimic S&P and rarely deviate from the composition.