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View Diary: Stock Market History: Why the Dow Jones Industrial Average Is Meaningless (58 comments)

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  •  I'm a person who hears stock reports on the radio (6+ / 0-)

    occasionally and am sometimes irritated by idiot infotainers that think the DJIA serves as a definition for "the market".  I only look at the DJIA throughout the day to see if it is diverging from the broader averages, the SP500 and Nasdaq.

    But never have I seen anyone of any financial credibility claim the DJIA is "worth using for any sort of long-term analysis or comparison."  The S & P 500 or even the Wilshire indexes are used.

    So other than our really stupid media in this country, what happened that makes this an issue for you?

    I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

    by Satya1 on Wed Feb 12, 2014 at 05:40:24 AM PST

    •  The spin applied to it, for one thing... (11+ / 0-)

      ...whether it's crowing about record highs, comparing numbers across decades, or just the gratuitous use of long-term graphs as some sort of "evidence."  In that respect, yeah, I'm mostly griping about the media.

      I think it's also instructive in terms of understanding just how much of our financial market is rigged by a fairly small group of insiders. Between this and LIBOR...

      From a historical perspective, it was interesting to see the rise (and fall) of various sectors of the market over time.

      Sure, it's a small thing...but I was surprised to learn of the frequency of changes made to the index, and thought other folks might find that information intreresting or useful.

      The word "parent" is supposed to be a VERB, people...

      by wesmorgan1 on Wed Feb 12, 2014 at 06:12:06 AM PST

      [ Parent ]

      •  Oh, the history is fascinating sometimes (2+ / 0-)
        Recommended by:
        wilderness voice, FarWestGirl

        about the nature of the sectors turning over or how different companies squander opportunities (eg. Kodak).

        And I hear you on the media thing.  I rarely expect to be educated or informed by the corporate media though.  Misinformed? YES!

        I'm not liberal. I'm actually just anti-evil, OK? - Elon James White

        by Satya1 on Wed Feb 12, 2014 at 06:39:17 AM PST

        [ Parent ]

      •  I've been down this rabbit hole before, wes. (1+ / 0-)
        Recommended by:
        bluedust

        Thanks a bunch for putting down a coherent diary on this. I tried but failed.

        In addition to the revolving door on the DJIA principals, the advent of the 401K radically altered the historical nature of the market.

        I think it went from $40.94 in 1896 to $800 in 1978. Enter the 401K - dumb money locked in for decades - and watch the graph - It quadruples by 1992, and quadruples again by 2006 or so, or so it did until we ran out of money.

        Not only do the 401Ks pump up the stock market, but they yoke the people to Wall Street's cart and tie our fate and "well being" to theirs.

        "Are you kidding? What would happen to our 401Ks?"

        I do wish you would have done the math and assembled the true value of the DOW today using defunct or disgraced companies. But I also know it's not an easy task, as that's where I dropped the ball on my attempt at writing this diary.

        Democracy - 1 person 1 vote. Free Markets - More dollars more power.

        by k9disc on Wed Feb 12, 2014 at 02:25:09 PM PST

        [ Parent ]

    •  The financial markets, (0+ / 0-)

      however broadly they are indexed, are not "the market" referred to by financial economists because these financial markets fail to include a lot of the economy, most notably real estate (not to also mention the old baseball cards that you've collected).

      Did you ver notice how har it is totype accurately on an iPad?

      by RudiB on Wed Feb 12, 2014 at 08:15:45 AM PST

      [ Parent ]

    •  The worst is when they try to think up (0+ / 0-)

      bogus reasons to explain a 20 point rise or drop. 'profit taking'? Sure whatever.

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