Understanding Dow Jones

I figured it’s time I did more than wonder exactly what the Dow Jones Industrial Average is all about. I’ve had a stock portfolio (tongue in cheek) since about 2001 and to this moment I couldn’t tell you what it means when they say the Dow is down or up x points or y percent. So I finally got around to doing some research a moment ago, and I came across a newsday.com article titled “Understanding the Dow Jones Industrial Average“.

I won’t pretend it’s all suddenly clear now that I’ve read the article, but at least I’ve taken a first step towards understanding the “Dow Jones”, and I’ve come away with bits of knowledge I did not possess before.

What I’ve learned from the article

  • The Dow Jones Industrial Average was developed in 1884 by Charles H. Dow
  • Charles H. Dow was the first editor of the Wall Street Journal
  • The Dow Jones Industrial Average tracks the stock prices for 30 companies (when it was first invented by Charles H. Dow it tracked 11 companies)
  • The Dow is the oldest stock market indicator and as such the most commonly referenced while not necessarily being the most comprehensive.
  • There are other Dow indicators that track the stock of companies within specific industries such as companies in the transportation industry (Dow Jones Transportation Average) and companies in the utilities industry (Dow Jones Utility Average).
  • The Dow Jones is not the only stock price indicators in existence. Other indicators include the New York Stock Exchange Index, the NASDAQ-OTC Price Index, and Standard & Poors 500 Index.

What I still need to understand

  • What exactly do the numbers mean in everyday terms?

Companies tracked by the Dow Jones Industrial Average

Altria Group Inc.
American Express Co.
Amer. Int’l Group Inc.
Boeing Co.
Caterpillar Inc.
Citigroup Inc.
Coca-Cola Co.
DuPont Co.
Exxon Mobil Corp.
General Electric Co.
General Motors Co.
Hewlett-Packard Co.
Home Depot Inc.
Honeywell Int’l Inc.
Int’l Bus. Mach. Inc.
Intel Corp.
Pfizer Inc.
J.P. Morgan Chase & Co.
Johnson & Johnson
McDonald’s Corp.
Merck & Co.
Microsoft Corp.
3M Co.
Procter & Gamble Co.
SBC Communications
United Technologies Corp.
Verizon Comm.
Wal-Mart Stores Inc.
Walt Disney Co.

Image: My Wall street boyfriend and I by findingyeyen via Flickr

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