Here's Why Investing in the Nasdaq Can Be So Dangerous

Tuesday featured a big whipsaw in the stock market, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) saw bigger swings than any of the other indexes. After having traded higher going into the early afternoon hours, the index fell sharply on news that stimulus negotiations in Washington had come to an end. By the end of the session, it was down more than 1.5%.

Investors often figure that popular benchmarks like the Nasdaq 100 or the S&P 500 are well-diversified sets of stocks. It's true that those indexes include shares from huge numbers of individual companies. But exactly how much of each stock you own as an index investor can vary widely. With the Nasdaq 100 index, it's actually one of the biggest dangers of index investing.

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Source Fool.com