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The dow has nothing to do with index funds. The dow industrial average is price weighted. The s&p 500 is market weighted. No competent index would follow the d
by staticman2 2y ago
The dow has nothing to do with index funds. The dow industrial average is price weighted. The s&p 500 is market weighted. No competent index would follow the dow- it doesn't even make sense conceptually, it has zero relation to the economics of the companies when you use price weighting, and 30 companies is a stupid low number.
There is, as far as I can tell, zero point to the dow, it's a completely useless tracker that is reported on because people talk about it because it's reported on.
- bhouston 2y ago> The dow has nothing to do with index funds I am not sure what point you’re making but there is ~$38B invested in index funds (the ones I mention in the previous post) that track the DJIA. Granted it is a fraction of the index funds which track the S&P 500.
- dkrich 2y agoThis may make sense in theory but in reality is wrong. The DJIA has historically had a very close correlation to the S&P. Plus there is an inescapable psychological aspect to the Dow that is unique. When the Dow is off 1500 points it hits much differently than the S&P falling 200 points.
- dubcanada 2y agoI have a feeling that is because every company in the DJIA is also in S&P, and most are very heavily weighted in S&P. Rather then companies within the DJIA doing as good as companies in the S&P.
- ywvcbk 2y ago> inescapable psychological aspect to the Dow that is unique. Sounds about the same as: > that is reported on because people talk about it because it's reported on. The unique aspect is that a randomly weighted index is just outright stupid however you look at it.