Key Points

    • The Dow Jones is a Stock Market Index
    • 30 Companies Listed on The Dow
    • How is the Dow Calculated?
    • Is the Dow Jones Right For Benchmarking Your Portfolio?

What is the Dow Jones Industrial Average?

The Dow Jones Industrial average is one of the most popular stock indexes in the United States. On the main index page, we make it clear what a stock index  is used for. The Dow Jones is a compilation of 30 large companies which are tracked for bench marking the stock market. Depending on your portfolio and investment goals, the Dow can be a good tracking tool for your stock portfolio.

Dow Jones Companies

The Dow has a total of 30 industrial stocks of well-known firms. They are 30 companies that you have most likely actually heard of, like Goodyear, Exxon, IBM or General Motors. The Dow tracks the fluctuations of these 30 stocks and gives traders and investors an insight into how the economy is performing. To look at a complete list click here

Calculation of The Dow Jones

This index is the sum of the 30 stocks in the index divided by the dow divisor. This is a divisor that is continuously being changed to make up for stock splits and to keep things even with history.

Historical Trends In The Dow Jones

The Dow Jones industrial average was actually the first index to ever be published in a major finical newspaper and is still regarded to as a key stock-market benchmark. The thought process was that investors and traders need something to compare their individual portfolios with according to Charles DowToday the Dow industrial average is one of the closed monitored marker trends. Market experts can analyze issues or advantages in the present economy by looking for specific stocks that increase in the certain situations, and specific stocks that decrease in others. The Dow is accountable for the publication of the Wall Street Journal, maybe the most well-known financial publication in the world. The Journal’s very first issue was on July 8, 1889. Dow likewise publishes a number of other monetary publications, along with Barron’s Magazine.

Today’s Use of The Dow Jones

To wrap this up, it is important to understand that the Dow was the first of it’s kind; however, it isn’t the only index around today. You can still use the Dow it it represents your portfolio. When you compare your portfolio to an index make sure it is aligned with reality. As an example, if you trade microcap companies than the S&P smallcap 600 will be a better representation of your portfolio.