If you’re reading this, I assume that you’re either already in the stock market or you’re interested in entering it. Perhaps you’ve been inspired by stories of people who made big bucks investing in stocks during the housing boom in the early 2000s. Or maybe you’ve been inspired by the explosive growth of online trading platforms that provide 24/7 access to the stock market and give anyone with a smartphone the tools to be a stock owner. In any case, congratulations! You’re on your way to becoming a successful stock marketer. But it takes some savvy and know-how to get there.

Step one: Pick a top-notch stock to invest in

To be a successful stock marketer, you need a steady supply of income-producing assets to trade. The best sources of these are the good old fashioned stock market and some of the newer-fangled online marketplaces. The trick is to find a stock that’s poised for strong growth and is relatively undervalued compared to its earning potential. Let’s take a look at some of the most popular and well-known equity markets.

The S&P 500

Traditionally, individual investors have turned to the stock market for their financial needs. And why not? Over the long term, the S&P 500 has provided exceptional returns in a reasonably low-risk manner. Nowadays, the 500’s market cap is about $12 trillion. That makes it the largest of the five stock market indices that are tracked by the world’s largest futures exchange, the Chicago Mercantile Exchange (CME).

The S&P 500 was designed in the 20s as a balanced portfolio of the 500 largest publicly traded companies in the United States. Its goal was to provide an index of the overall American economy. As a result, the S&P 500 is generally considered a good benchmark for measuring the performance of the market. It is well-known that the large-cap growth portion of the S&P 500 significantly outperforms the overall market, as measured by the S&P 500Vectors® Monthly Index.

The Dow Jones Industrial Average (DJIA)

Another popular benchmark for measuring the performance of the market is the Dow Jones Industrial Average (DJIA). The Dow was originally designed as a tool for measuring the performance of American business leaders in the 30s. The Dow Jones average is currently valued at about $12 trillion, which makes it the second-largest cap market in the world after the S&P 500. Like the other benchmark indices mentioned so far, the DJIA is an excellent choice for long-term investment.

The advantage of the DJIA is that it generally trades at a discount compared to its underlying index. This is mainly due to the fact that individual investors are more interested in the performance of the market as a whole than the performance of specific companies. As a consequence, the DJIA provides a good opportunity to buy high-quality stocks at a discount.

One of the biggest bargains in the market today is Facebook (FB). As of this writing, the stock is trading at just $27.50, which is about 6% below its recent all-time high of $30. Let’s take a look at why the stock is so cheap:

• It’s one of the largest, if not the largest, social media platforms. Millions of people use it every day.
• It’s extremely popular. More than 100 million people use the service every month.
• Its ad revenue is increasing year after year. Last year, sales were up 31% from the year before and 12% from the year before that.
• It has more than 500 million users around the world. That’s a massive audience for any business.

For all intents and purposes, the Facebook stock is a no-brainer at this price. It’s safe, it’s easy to understand, and it offers great potential for profit. Now, if you’re new to the stock market, it’s not a bad idea to seek help from a financial professional before making any large purchases.

The NASDAQ 100

The NASDAQ 100 is one of the newer-fangled stock market indices. The NASDAQ was originally founded in the ‘80s as a listing platform for early-stage technology companies. The index is generally considered a good choice for short-term investment since it gives participants the opportunity to profit from the ups and downs of the technology sector. Just remember that the NASDAQ 100 can be volatile, so careful analysis is required if you want to take the leap into this market.

In many ways, the story of the NASDAQ 100 is similar to that of the S&P 500 and the Dow Jones Industrial Average. The platform was originally designed to be a reflection of all things tech, and that remains true today. However, today the NASDAQ 100 is a lot more than just a technology index. It now lists a variety of high-quality companies from a range of industries. This ensures that nearly everyone can find something on the 100 to suit their needs.

The Nasdaq Composite

The Nasdaq Composite is one of the three major stock market indices that trade on the New York Stock Exchange (NYSE). It is a broad-based index that includes many different kinds of stocks ranging from technology to consumer staples, telecommunications, and pharmaceuticals industries. On December 31, 2018, the Nasdaq’s market cap was about $21 trillion. A lot of money, to be sure!

Just like the other two indices mentioned so far, the Nasdaq Composite heavily weights the technology sector. Over the long term, it closely resembles the S&P 500 in its performance. However, unlike the S&P and the Dow, the Nasdaq Composite is heavily influenced by the performance of smaller companies. This is mainly because the NYSE only began including company sizes beginning in 2011. Thus, for the most part, the index measures the performance of smaller-sized companies that are often found in the technology sector. It’s a good choice for short-term investment that’s heavily influenced by the performance of smaller companies. However, even those seeking medium- or long-term investment should feel comfortable with this market.

One of the best values in the market today is Nvidia (NVDA). As of this writing, the stock is trading at about $225 a share, which is a 20% discount to its recent all-time high of $275. The graphics processor company had an incredible year in 2018, posting a 41% gain. This makes it one of the best performing stocks in the market today.

More choices

Just as the previous indices mentioned offered various investment opportunities, so too does the all-time favorite of mine, the Motley Fool CAPS All-Star Nasdaq 100 Tracker (NZDQ). It’s a fund that focuses on the performance of the NASDAQ 100. That means it primarily measures the stocks’ performance in comparison to the S&P 500 and the Dow Jones Industrial Average. As a result, it is a balanced portfolio that allows participants to profit from the overall strength of the market, as well as the performance of individual companies within the technology sector.

The beauty of the NZDQ is that it provides participants with a variety of tools. For example, every month it releases a detailed analysis of the performance of the 100 stocks it follows. In addition, it provides useful charts and graphs that illustrate each stock’s performance. If you’re looking for a one-stop shop for information on the NZDQ, you can visit their website at caps.fool.com. Finally, it’s important to note that just because a stock is in a well-known and popular index, such as the S&P 500 or the Dow Jones Industrial Average, this does not mean it’s a good choice for investment. Always do your own research before committing funds to trade.