ipl-logo

The Meaning And Importance Of The Dow Jones Industrial Average

993 Words4 Pages

The Meaning and Importance of the Dow Jones Industrial Average
The Dow Jones Industrial Average (DJIA) is widely used in the stock markets. Most of the financial news often focus on “the Dow.” When the Dow rises, individuals are exited while when it goes down they get upset. The Dow is a means of measuring the overall health and growth of the financial market.
The DJIA was first published by financial reporters Charles Dow and Edward Jones on 1896. Initially, Charles highlighted 11 companies with highly capitalized stocks. Later on May, 26 1896, the index had 12 industrial companies listed on the New York Stock Exchange. During this time, both industrial and manufacturing firms were gaining importance compared to the railways. The twelve stocks …show more content…

There is an extreme diversity within the Dow with the representative companies chosen due to their longevity, highest divided yield, and the sector they represent in the economy. (Amene, Goltz and Sourd 2008). The DJIA is only a representative of the market and does not indicate the market as a whole. The stock market is rather too complex for the Dow to represent is as a single index. The Dow may drop suddenly for example when a listed company on it goes bankrupt or it is under investigation. It may also surge when a certain stock is about to be brought or when a company has a major innovation. One may look at the U.S. economy today and believe that an index for only 30 listed companies has no value. On the contrary, the Dow remains a good indicator the stock market and it is the most referenced index by the financial …show more content…

The 30 companies only account for a small share compared to all the listed companies in the stock market in the U.S. The index does not weigh companies in relation to their importance in the market. Hence, the 30 companies do not match the 30 largest companies in relation to the current market capitalization. Many people believe that the index comprises of the 30 largest companies in the U.S. which is not true. Other indices like the Standard & Poor’s 500 and the Wilshire 5000 solve this problem by including more stocks. The S&P 500 index has 500 stocks selected according to their market size and liquidity. The Wilshire 5000 takes into account 5000 stocks and it is adjusted using more than 7000 capitalization weighted security

Show More
Related
742 Words | 3 Pages

After the end of World War I the Untied States entered a period of the Roaring Twenties. During the Roaring Twenties, production was high, spending was high, and the Stock market increased by over four hundred percent. By 1929, stocks were overpriced, factories were overproducing goods, and bad credit all climaxed with the collapse of the American economy. By the time the United States realized what was wrong the economy was plunging with no end in sight. In an attempt to prevent the collapse JP Morgan invested one hundred million dollars into the stock market to try and calm people and prevent selling.

Read More
493 Words | 2 Pages

In chapter 8, the core economic principle that displays itself often is The Consequences of Choices Lie in the Future. This principle presents the idea that what we are doing in today’s economy will have an impact on the future. Whether it is decisions on cutting benefits or raising taxes, any of these could cripple our futures economy. In the chapter, it discusses the fiscal policy and how it saved America’s economy after the depression. By monitoring the nation 's spending budget and taxes, so another depression or a recession does not occur.

Read More
449 Words | 2 Pages

THE GREAT DEPRESSION 1929 was the start of the deepest and darkest time for the United States Stock Market and the people of the United States. The Market crash, the loss of American jobs and homes, lead to one of the hardest downfalls in American history. Along with billions of dollars lost due to bad stock trading, over extending on personal credit and the spending of money that had yet to be produced. The American people never stood a chance and in a matter of 10 days the lives of almost everyone changed. In 1928 Herbert Hoover was elected as president.

Read More
653 Words | 3 Pages

The Great Depression was a severe worldwide economic depression that took place during the 1930s. The article by Edwin Gay and pictures compiled by Cary Nelson are both descriptions of how the Great Depression was and the several impacts that it had on the American economy. The range of the great depression is unprecedentedly wide according to Edwin Gay. The great depression was believed to have started from the collapse of the US stock market in 1929. This was shown in a picture as compiled by Cary Nelson

Read More
692 Words | 3 Pages

For example, In Document five it states that in 1929, a collapse of the American Prosperity happen. Which means people was putting a lot of their money into securities hoping to the make the stocks rise. People began gambling which made a lot of them go into debt (Harry J. Carman and Harold C. Syrett, A History of the American People, 1952). Also a lot of people were speculating, meaning investors was putting money towards stocks hoping to gain, but risking a loss. By 1931, six million Americans could not find work.

Read More
760 Words | 4 Pages

1. In the broader context (not specific to Dollar General), what is KKR’s investment strategy? What are the challenges KKR will encounter to make its investment in Dollar General successful? How could KKR add value to Dollar General?

Read More
1681 Words | 7 Pages

The capital business sector is the business sector for securities, where organizations and the legislature can raise long haul stores. The capital business sector incorporates the stock exchange what 's more, the security market. Money related controllers, for example, the U.S. Securities and Exchange Commission, direct the capital markets in their individual nations to guarantee that financial specialists are ensured against extortion. The capital markets comprise of the essential business sector, where new issues are appropriate to financial specialists, and the optional business sector, where existing securities are exchanged. (n.d.).

Read More
1461 Words | 6 Pages

Lockheed Martin’s shareholders are classified as dominant stakeholders because they have power to affect decisions and wield the authority to do so. This power originates from the shareholders ability to make Lockheed base its business decisions around earning money for its investors, thereby validating their legitimacy to the company as rightful owners. Despite these attributes, shareholders have little to no impact on most of the corporation’s daily management and have a low threat capacity and necessary cooperation level; they merely own the stocks. Given shareholder's status as type two stakeholders Lockheed Martin needs to monitor stock

Read More
585 Words | 3 Pages

It allowed investors to purchase a stock for only a fraction of its price and borrow the rest. Brokers charged high interest and could demand payment of the loan at any time. If the stock went up, you could pull your money out to pay off the loan and interest charges and still make money. This contributed to the Great Depression because the majority of people were not wealthy.

Read More
438 Words | 2 Pages

The biggest enemy to the end of the financial crisis and the beginning of an economic recovery is Treasury Secretary Henry Paulson himself. Lets forget for a minute that the decision by Paulson and Bernanke to let Lehman Brothers fail was the precipitating event leading to credit markets freezing up and the first round of financial panic. Since then, the two have been working diligently to correct this collosal mistake. But separating actions from words, we see that words are in fact much more potent. Since the end of September, every time Henry Paulson has opened his month, the Dow has dropped on average 196 points.

Read More
923 Words | 4 Pages

As stock prices continued to rise, the market became very popular. Eventually the stock prices started to fall during September through early October,

Read More
1975 Words | 8 Pages

Walmart stores is one of the largest retailers not only in the United States but across the world. They hold tremendous power from a retail level and on a political level with governments in the US and outside. Ratios help create Walmart as a company and allows investors to be able to gauge and understand the metrics of the organization. These metrics and ratios help investors understand the specific direction of the company and the effectiveness of executive leadership. The primary ratio that must be understood regarding Walmart's earnings-per-share is the price earnings ratio.

Read More
660 Words | 3 Pages

“The First Day” by Edward P. Jones is a short story written in 1992. The short story is about an African American mother taking her young daughter to school for the first time. The daughter becomes ashamed of her mother because she sees where her education level is at. The mother is also ashamed of herself because she didn’t get education throughout her life. In “The First Day” the opening scene sets the tone for challenging the status quo and creating a life of success.

Read More
1025 Words | 5 Pages

contribute to its gag rule. Tesco is also exposed to the non-food division of its business in which they are recorded losses and their competitive advantage is not sustainable any longer because the likes of the Aldi, Lidl and the one pound store spring up in the grocery stores in the UK. Hill and Knowlton (2006) described a study of the use of corporate reputation in the determination of financial analysts when assessing a firm’s operation. After inflating accounts by over £260 million, and wiping more than £2.5 billion off its market value, Tesco has severely damaged its brand, eroded consumer trust and shareholder confidence. To append to its woes, the Serious Fraud Office has set up an investigation into the company’s over stated profits.

Read More
937 Words | 4 Pages

After all, some brands have fallen off the ways and some others have surged up almost overnight.

Read More

More about The Meaning And Importance Of The Dow Jones Industrial Average

Related Topics

Open Document