Friday, December 30, 2011

The Dow is up 6% for the year!..Wow, great!...What is "The Dow"?

At the daily close of the US stock market the media reports how the stock market has done overall for the day by announcing how "The Dow", or "Dow Jones" has performed.  I don't think most people know exactly what this means.  The offical name is "Dow Jones Industrrial Average (DJIA)". 

Below are the 30 "Blue Chip" companies that comprise the Dow. Each of these companies are supposed to be representative of the industry they compete in. In theory, how goes the price of the stock of the major company in the sector so goes the entire sector.

Go HERE for a more detailed explanation how DJIA index is created and the math behind it.

The Dow itself is up 6% for the year which means if you invested $1,000 at the begining of the year in the components of the Dow, you would have earned an additional $60.00. Don't spend it all in one place...
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