TBCi 20 comparison with classic indexes (S&P 500 and DJIA)

Oct 29, 2018 · 3 min read

DJIA (Dow Jones Industrial Average)

The Dow Jones Industrial Average is a stock market index that shows how 30 large, publicly owned companies based in the USA have traded during a standard trading session in the stock market.

The value of the DJIA is not a weighted arithmetic mean and does not represent its component companies’ market capitalization, but rather the sum of the price of one share of stock for each component company. The sum is corrected by a factor which changes whenever one of the component stocks has a stock split or stock dividend, so as to generate a consistent value for the index.

S&P 500 (The Standard & Poor’s 500 Index)

The Standard & Poor’s 500 Index — S&P 500 is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies by market value. The S&P 500 is a market value or market-capitalization-weighted index and one of the most common benchmarks for the broader U.S. equity markets. Other common U.S. stock market benchmarks include the Dow Jones Industrial Average or Dow 30 and the Russell 2000 Index, which represents the small-cap index.

The S&P 500 is one of the most widely quoted American indexes because it represents the largest publicly traded corporations in the U.S. The S&P 500 focuses on the U.S. market’s large-cap sector and is also a float-weighted index, meaning company market capitalizations are adjusted by the number of shares available for public trading.

TBCi 20 (Tugush Blockchain Capital Crypto Index)
TBCi 20 diversifying holdings over 20 different assets allows you to invest in the entire volatile crypto market without the risk of betting on a single coin. We constantly monitoring the current top of cryptocurrency market to determine what assets we are going to add to our index and will be rebalanced if necessary.

Structure: Dow Jones Industrial Average vs S&P 500 vs TBCi 20

The major differences between DJIA and S&P 500 lies in their diversity and weighting methodology.

The S&P 500 is often the institutional investor’s preferred index given its depth and breadth, while the Dow Jones Industrial Average has historically been associated with the retail investor’s gauge of the U.S. stock market. Institutional investors perceive the S&P 500 as more representative of U.S. equity markets because it comprises more stocks across all sectors (500 versus the Dow’s 30 Industrials).

The components in the DJIA do not change often, as it takes an important change in a company for it to be removed from the index. If the index comes up for review, the editors on the Averages Committee at Dow Jones & Co. often replace more than one company at a time.

Furthermore, the S&P 500 uses a market capitalization weighting method, giving a higher percentage allocation to companies with the largest market capitalizations, while the DJIA is a price-weighted index that gives companies with higher stock prices a higher index weighting. The market capitalization-weighting structure is more common than price-weighted method across U.S. indexes.

Stocks in the S&P 500 are weighted by their market value rather than their stock prices. In this way, the S&P 500 attempts to ensure that a 10% change in a $20 stock will affect the index the same way that a 10% change in a $50 stock will.

TBCi 20 works on a completely different market, and its assessment requires more flexible tools. Cryptocurrency market is very volatile, and timely rebalancing plays the main role here.

So rebalancing is crucial to stay a stable and healthy index portfolio. TBCi 20 evaluate and use several different indicators to determine which Coins to add to our index or to exclude from our index. The value of TBCi 20 will be determined by the growth of value of the different assets that are backing our index. TBCi 20 Crypto Index is the summation of market capitalizations of all cryptocurrencies within the index divided by the divisor. This similar to S&P 500 methodology, as the previous period’s sum of market capitalizations of its constituents divided by our arbitrarily-picked index starting value.


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