The Dow Jones 65 Composite Average is an index...you know, a group of securities that rep a market. In particular, it’s a group of 65 large and public companies, representing utilities, transportation, and industry (like manufacturing and construction). 30 of those stocks are the same ones in the Dow Jones Industrial Average, 20 are from the Dow Jones Transportation Average, and 15 from the Dow Jones Utility Average.
Hold up...that’s three markets in one index, though?
Yeah. Actually, the Dow Jones 65 Composite Average is price-weighted for each of those three markets, which means that each of the 65 companies’ securities in the index are weighted by the price per share. The bigger the price of your share, the more weight you’ll have in the index.
Other big indices, like the superstar Dow Jones Industrial Average, is weighted via market capitalization, which multiplies the number of shares by the price of the share. The number of shares don’t affect the Dow Jones 65 Composite Average...nope, nada. Because not all indexes (yeah, you can use “indexes” or “indices”) are calculated the same, you gotta make sure you know what’s going on with them behind the scenes to really know what you’re looking at.
The Dow Jones 65 Composite Average used to be a good measure of the economy when utilities, transportation, and industrial doings made up most of the economy. But these days, technology, healthcare, and finance are dominating the scene. So this index is, well, going out of style. It happens to the best of us.
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Finance: What is the Dow Jones Industria...2710 Views
finance a la shmoop- what is the Dow Jones Industrial Average? well it's just
an index. it's a basket of 30 industrial stocks hence the catchy industrial word [list of the 30 stocks involved in the Dow]
in there and it was started in 1896 by Charles Dow and Edward Jones sort of the
Coke and Pepsi of stock averages in the day .worth noting is the fact that while
the Dow average is quoted often in the press it's not something that real Wall
Street traders really rely on that much as a market place holder anymore. why?
well because the Dow comprises only 30 stocks. it isn't really a broad market [Dow Jones in the trash]
representation, and you know the way the S&P 500 is the 500 is bigger than 30. Big
Brother has way more stocks and is thus way more liquid than the relatively
blippi set of 30 stocks that the Dow offers. over time the Dow has changed as
companies were bought and/or died and or just withered and became no longer
relevant. i.e. newspaper industry. which means that this thing has gone through
more faces than Kanye West .yeah. [Kanye West faces pictured]
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