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I agree that nowadays the Dow is somewhat obsolete, but: The DJIA is not meant to be viewed in isolation but in the context of other indexes like DJTA, the id
by stackghost 2y ago
I agree that nowadays the Dow is somewhat obsolete, but:
The DJIA is not meant to be viewed in isolation but in the context of other indexes like DJTA, the idea being that if industrial companies are doing well but the railroads or shipping aren't, it will be reflected in those respective averages diverging, hinting at deeper economic problems.
Also they adjust for stock splits now.
- JJMcJ 2y agoMost news reports also give the percentage change as well as the point difference. That began about 20 years ago.
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- ninth_ant 2y agoEven with this objective, using the share prices and not the market cap of the companies involved creates enormous skew. For example UNH and especially GS take up the largest individual components despite not being being amongst the largest companies, giving their share movement disproportionate weight in the “index”. Perhaps it made sense 140 years ago but today it belongs in the rubbish.
- ywvcbk 2y ago> that if industrial companies are doing well Except it might be very hard to tell that because it’s effectively randomly weighted. Caterpillar almost has the same weight as MS and double that of Amazon.