By Niko Hammond

These days, everyone seems to be an armchair economist (or healthcare expert). Water cooler talk is equally likely to be about the stock market, or the Dow Jones Index or the Standard and Poors stock market index as the Angels or Yankees. Learning about a stock market index can be difficult. While there are popular websites that provide advice, it can be difficult to get started. This article provides a step by step guide to learning about stock market indexes without overloading the reader with financial jargon.

Step One: Know how to Identify a Stock Market Index
This may seem simple, but stock market indexes can have many nicknames: the DOW, the DJIA, the DOW 30, the Spiders, the Diamonds, the S&P, the SPY, and the DJ100. All of these nicknames refer to stock market indices; a basket of stocks designed to track a specific section of the stock market.

Step Two: Track a Stock Market Index
The DOW JONES INDUSTRIAL AVERAGE is a collection of stocks issued by America's top 30 companies. It was created by Charles Dow in the 1930's. The Standard and Poors 500 is a much bigger index, built from 500 American Companies and created by the Standard and Poors Company.

Checking the value of a stock market index every morning will help you learn about the economy and help you maintain your financial wealth. There are plenty of good financial sites out there, to find daily quotes for a stock market index, just type 'DOW' or 'SPY' into your favorite search engine. Soon you'll be on your way to stock market education.

Step Three: Track your investments against a stock market index.
You may have investments in a single stock, like Exxon or General Electric. Limiting your investment portfolio to a single stock, or even a few stocks, can be risky. Try comparing the performance of a single stock against one of the stock market indices. You will probably see more price variation in the single stock and a more consistent, somewhat stable return, from the index.

Conclusion:
A Stock Market Index represents a basket of individual stocks. It is useful for diversifying your investments and protecting against wild swings in the market. This article has presented three steps to learn more about stock market indexes: identify an index, track the index and finally, track your investments against it. good luck and have fun.