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Don't they adjust for that when splits happen?
by dheera 5y ago
Don't they adjust for that when splits happen?
- dmurray 5y agoNo. Lots of other measures do, but not the DJIA.
- christophilus 5y agoNope. It’s price weighted. Hence the comment on how dumb it is.
- dheera 5y agoSounds like a simple thing to solve if they just let me make a pull request for the function getDJIAValue() or wherever the hell it lives. Based on price is fine -- when splits happen just adjust the weight by the split factor. Are they really that incompetent at coding?
- yreg 5y ago>Based on price is fine -- when splits happen just adjust the weight by the split factor It's not fine since companies have varying counts of shares, nevermind the stock splits. The proper solution is getSharePrice() * getShareCount(). Which is what most other indeces do.
- bosie 5y ago> Are they really that incompetent at coding? Wait, you think this is a _coding_ issue?
- quickthrowman 5y agoIt’s not an error in the implementation, the problem lies within the index specification: https://www.spglobal.com/spdji/en/documents/methodologies/methodology-dj-averages.pdf https://www.spglobal.com/spdji/en/documents/methodologies/me...
- dheera 5y agoSo change the specification. Fire the person who hasn't changed it already and schmoozing with beer in a Manhattan high rise, and put an engineer in charge.
- wheybags 5y agoThey did, it's called the s&p 500, and it's run by the same company.
- kortilla 5y agoIf you change the specification, that’s a new index FFS. It’s like changing the specification for Fahrenheit.
- dheera 5y agoOh I'd __love__ to change the specification of Farenheit so that people get confused and stop using it.
- yreg 5y agoNo. Apple was the largest component and now it’s 19th. Also amusingly, DJIA is unable to include Amazon since it would obliterate the rest of the index.
- iso1210 5y agoAmazon is small fry compared with BRK-A, which was up $8,854 on Friday - over twice Amazon's share price.
- dheera 5y agoJust weight it by 0.1 or whatever? Simple solution.
- mastax 5y agoThe whole point of the DJIA is that the same rules have been used for a long time. If you want a better index there are many available.
- dheera 5y agoSo version it in a repo e.g. on Github, and ensure continuity in the DJIA index from one version to the next on the date the version is committed. We have technology, we should use it. I could add a clause that says if a share splits its weight gets multiplied accordingly, and that would have the effect of (a) DJIA stays continuous now (b) DJIA stays continuous through next split. It doesn't disrupt anything now, and prevents future inadvertent disruptions. Anyone that is insisting we shouldn't change it is stuck in a backward age. Honestly I don't understand why there are so many no-sayers on HN. We should be building the future, not making excuses.
- freeone3000 5y agoThe index you're describing has already been created by Charles Schwab as SCHV in 2009 (and SPCH in 2005 for the S&P, and ...). There are already new indexes -- lots of them. DJIA is useful because it's an index calculated using the same metric for over a hundred years, so you can track performance for reporting and public perception.