Dow Jones Industrial Average

[A.Wilson013]

Just curious: Why do you folks think the media has such a hard-on for the DJIA?

 

[RunninInGA]

I anticipate this thread will receive some tender loving from our anti politics moderator.

 

[BrianSD_42]

I've really been enjoying Mark Hamill reading certain tweets from _____ in the voice of 1990s joker on Youtube. That guy has talent.

Planet Money did a story on the Dow Jones hype.
Episode 443: Don't Believe The Hype : Planet Money : NPR

The real question is why are you looking at the Dow Jones at all. Are you deep in index funds tied to the DJ?

Despite all the celebration, the Dow Jones industrial average has not hit record highs recently. If you adjust for inflation, the highs just aren't as high as they seem.

And even if it does hit a real, inflation-adjusted high in the next few weeks, it won't mean much. The Dow is a seriously flawed stock index, and it's certainly not a good way to measure what's going on in the overall economy.

On today's show, we rain on the Dow's parade and explain why a lot of very smart people say we should ignore the Dow.

 

[1engineer]

I anticipate this thread will receive some tender loving from our anti politics moderator.

Probably..

 

[A.Wilson013]

The real question is why are you looking at the Dow Jones at all. Are you deep in index funds tied to the DJ?

I'm not, but with it reaching 20,000 the other day, it's all I hear about on the radio. Additionally, my home page is wsj.com and even as a "business oriented" media source, DJIA is right there at the top of their ticker. Above even the S&P 500.

Most finance people (any finance people care to chime in?) agree that the DJIA is garbage as it utilizes stock price with complete disregard for volume in order to calculate the weights different companies have in adjusting the average. Not to mention it only looks at 30 companies... Should we really base the state of our economy (I know, that's a real stretch) on 30 companies? Especially when they're weighted by price?

As an example, with MMM closing today at $175.17 and AAPL closing at "just" $128.75, MMM has a higher weight than AAPL. But, AAPL has nearly 50x the volume...

Goldman could split tomorrow and have a lower weight than McDonalds.