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  • Writer's picture Treavor Dodsworth CFP®, CPA, CKA®

#34 - Who's Dow Jones


DJIA

If you have seen news recently about the stock market, there is a good chance the Dow was mentioned.


The Dow (aka Dow Jones or Dow Jones Industrial Average or DJIA) commonly refers to a stock market metric that was initially created over 100 years ago. It is frequently looked at to determine the overall health of the stock market. The interesting thing about the Dow is that as of the time of writing this article it only tracks 30 US companies.


These 30 companies tend to be very large and I am by no means saying this is a useless metric but there are thousands of publicly-traded companies in the United States and thousands more outside the United States. Therefore, there is a very large portion of the stock market that this metric is missing.


Interestingly, there is actually a Dow Jones US Total Stock Market Index that represents a much larger segment of the US stock market. For whatever reason, we have habitually used the metric that only includes 30 companies more often.


Hopefully, this short explanation provides a little clarification next time you hear someone mention "the Dow."

 

Interesting Article(s) or Video(s)


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  • This article explains the history of the index and makes a distinction between the company and the index.


  • This article discusses some of the more popular market stock metrics at a high level.

  • Full disclosure, this has nothing to do with finance. The video is an excellent concise biblical perspective on anxiety. Hopefully it is helpful during this time!

 

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