Question: What are Blue Chip Baskets, SPDRs, Diamonds, and HOLDRs
Answer: Investing in blue chips is such a fundamental part of Wall Street that several of the major financial institutions have created ways for average investors to invest in them without a lot of hassle or work. Now, instead of trying to pick and choose a single company to invest in, you can put your money into several different companies at once - saving time and money.
Blue Chip Baskets
Morgan Stanley Dean Witter created a new way to invest in blue chips called Blue Chip Baskets. Basically, instead of using your money to buy one or two stocks, you buy one share of a "basket" which includes tiny portions of stock in several blue chip companies. For example a $50 basket may include 1/10 a share of Microsoft, 1/5 a share of Disney, 1/8 share of Coca-Cola, etc. This allows you to spread out your investments among several companies without having to pick and choose the specific companies.
SPDRs
Nicknamed "spiders", this type of investment stands for "Standard and Poor's Depositary Receipt". SPDRs are traded on the American Stock Exchange under the ticker symbol SPY. They trade at 1/10 of the value of the S&P 500. Dividends are paid to owners of SPDRs every quarter.
Diamonds
When you buy a share of a Diamond, you are buying a fraction of each of the stocks in the Dow Jones Industrial Average. Diamonds are traded on the American Stock Exchange.
HOLDRs
Think plastics are going to go sky-high this year? Maybe you are interested in bio-tech? HOLDRs allow you to invest in sectors as opposed to individual companies. They were were originally created by Merrill Lynch and serve as a nice tool for those who uninterested in researching specific companies. HOLDRs are traded on the American Stock Exchange. For more information, read HOLDRs: The Most Revolutionary Thing Since Mutual Funds< Back to the Beginner's Corner
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