Market Proxy
Categories: Board of Directors, Trading
Think: market approximator.
A “market proxy” is a theoretical representation of the market as a whole that’s supposed to tell us how it’s doing right now, and how it might be doing in the future. Market indexes like the Dow Jones Industrial Average are examples of market proxies: they only include a limited number of securities, but analysts use the indexes’ behavior to draw conclusions about the market as a whole.
Sometimes they’re right, and sometimes they’re not. Sometimes the index is a good market proxy—the S&P 500 is fairly reliable, for instance—and sometimes it’s not.
As investment trends change, some market proxies might go the way of the rotary phone, while other new ones are created to take their place.
Related or Semi-related Video
Finance: What is a proxy?8 Views
Finance a la Shmoop. What is a proxy? Well it's kind of an approx-i-mate. As in, it's
not exactly the way dogs mate. Not all of them try to text their goodies to each
other. In the land of Finance, a proxy is simply a substitute.
Someone's vote, for example, can be given to another party, who then acts on behalf
of the person, who was going to vote in the first place. But really couldn't care [coffee drive-thru]
less about the outcome, so she went to Dunkin Donuts instead. That's how
most votes are taken in public companies. Proxies are sent out to shareholders, who
then designate their wishes, to then be submitted to an individual, physically
present at the vote, who then you know votes and that's it.
We'll leave you with final warning. Beware of any incoming texts you may get
from a German Shepherd. [Phone with dog text]