companies and is by definition focused on industrial companies, it does not accurately reflect the performance of large swaths of the U.S. If you think the Dow is overbought, you might consider the new ProShares Short Dow 30, an ETF that moves inversely to the Dow and trades under the apt symbol DOG.īecause the DJIA is made up of exclusively U.S. , whose basket includes the 50 highest yielding stocks in the S&P 1500. , which tracks an index of the largest fifty U.S. I suggest that investors will be better off trading their Diamonds for the In addition, if we adjust the Dow average for inflation, its real peak is 14,100. Is up about 150% followed by companies like This index is 12% off its 2000 peak.Īs the Dow average breaks 2000 highs it is important to note that only ten of the thirty companies have actually accomplished this feat. The S&P 500 Index is also market-cap weighted leading to an unhealthy concentration in the largest stocks. But over long stretches, the Dow 30 and the S&P 500 have correlated closely. You may be thinking that the S&P 500 Index has overtaken the DJIA in popularity. Special Offer: Looking to profit from the move to wireless broadband? Click here for three undervalued wireless companies set to soar thanks to WiMax and 3G networks-from Forbes Wireless Stock Watch. Since 1959, other companies added include ![]() A few years ago, the Dow's overseers made history by adding the first two stocks listed not on the New York Stock Exchange, but on the Nasdaq: Remains as part of the modern-day average. In fact, of the initial companies included, only ![]() Over the years, companies in the index have been changed to ensure the index stays current in its measure of the U.S. The DJIA covers 30 large-cap companies, which are subjectively picked by the editors of The Wall Street Journal. Today, the DJIA is a benchmark that tracks American stocks that are considered to be the leaders of the economy and are listed on the Nasdaq and New York Stock Exchange. A special divisor other than the number of stocks is used to avoid distortions when constituent companies split their shares or when one stock is substituted for another. To calculate the first average, Dow added up the stock prices and divided by eleven, the number of stocks included in the index. The averages were, well, plain old averages. A revolutionary idea at the time, its implementation was simple. Which global bank ETF is the best one to buy now? Click here for the recommendation in Chartwell Advisor.Ĭharles Dow had the vision to create a benchmark that would project general market conditions and therefore help investors bewildered by fractional dollar changes. ETFs allow you to buy a whole basket of them. ![]() Special Offer: Banks in the United States and around the world are beating the market. In 1916, the industrial average expanded to 20 stocks the number was raised again, in 1928, to 30, where it remains. In 1896, Charles Dow created the first Dow Jones Index that included nine railroad stocks, a steamship line and a communications company. Click here for all of his currently recommended ETFs and closed-end funds in Chartwell Advisor. Carl Delfeld's Asian Opportunity portfolio is up 14% in 2006. Let’s look briefly at the history of this index and discuss some better ETF options than the Dow Diamonds (DIA) to tap into the leadership of mega-caps. ![]() While the Dow is still the most-quoted market indicator in newspapers, on TV and on the Internet, it may be out of date. There has been substantial cheer over the Dow Jones industrial average (DJIA) closing above its January 2000 high.
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