The Dow Jones represents less than 25% of all stocks traded. It only takes a few stocks to perform well to raise the entire index dramatically. Is the S&P a better barometer or the New York Stock Exchange?
2006-11-05 06:07:40 · 10 answers · asked by Anonymous in Business & Finance ➔ Investing
The Dow will have more volatility since it is only comprised of 30 stocks. Typically, the S&P 500 is viewed as a better measure of large cap performance, as it is comprised of the largest 500 public companies. If you want a measure for companies of all sizes, I would recommend the Russell 3000 or the Wilshire 5000.
2006-11-05 06:29:25 · answer #1 · answered by c 3 · 0⤊ 0⤋
No its not a good indicator of the market, for the reasons you have already said. Its only 20-25 percent of the market capitalization. Its a price weighted index. Three or four stocks can drive the index up or down. The highest price stocks carry the most weight. Its only 30 stocks. Its the oldest index and just a number people like to look at. A better indicator of the market would be the S&P 500 index, which is what beta is based on. Or the Wilshire 5000,
2006-11-05 07:24:15 · answer #2 · answered by jeff410 7 · 0⤊ 0⤋
I agree with your statement that the S&P, since it's a broader index, is a better indicator. The DOW Industrials only represent 30 stocks. While they are chosen to be indicative of the whole market, they aren't always, since large movements in even one of the DOW stocks can have a major effect on the indicator.
Over time, it's probably pretty indicative. On any given day, no.
2006-11-05 06:14:19 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
great question, No.
Its cap weighted only a few have been pulling it up, you have to look at a Target Asset Mix to see how a diversfied port that has all asset classes from diferrent cap weighted style stocks/funds-
Also take the Dow hit 11K in 2000 when a USD$ was was worth 1.20- Today the Dow is at 12,000.00 but the USD now gives you .85-.87
of purchasing power- now think- do you personally feel richer today regarding purchasing power? than you did in 200o? I believe you were asking baout the health of US? The Dow Jones needs to hit 14,000 before it breaks 2000 bull market level! (ssshhhhhh!!!) this could be either bullish or bearish. in the future
2006-11-05 06:28:14 · answer #4 · answered by Anonymous · 0⤊ 0⤋
In simplest terms, the broader the index, the truer the reflection of the state of the market. For example, even though the Dow recently broke it's all time high, the S&P 500 is still below it's all time high. That should be telling you something.
2006-11-06 01:02:55 · answer #5 · answered by 4XTrader 5 · 0⤊ 0⤋
the Dow is only THIRTY stocks - it is a terrible benchmark - someone tell the media this please! it isn't a bad benchmark to compare to the S&P 500, which is probably the best domestic benchmark you can use, if you wanted to see how "mega caps" (very large companies) were performing vs. other large cap stocks. keep in mind that today's dow, which is setting records, has 4 different stocks in it than it did back in 2000 when it set the old record...so not only is it a bad benchmark, but it is a different bad benchmark than it was before.
2006-11-05 14:25:45 · answer #6 · answered by christopherthomastierney 1 · 0⤊ 0⤋
Not really. In southern terms, the Dow is equal to telling someone "It's over yonder" with a little bob of the head. Unfortunately, yonder does not specify an exact bearing and/or distance, so...
2006-11-06 11:56:59 · answer #7 · answered by Anonymous · 0⤊ 0⤋
sometimes when the Dow is down ,my investment is up. it just depends on where your money is,but on an average it is a good indicator.
2006-11-05 06:17:21 · answer #8 · answered by Tired Old Man 7 · 0⤊ 0⤋
It tends to be in practice but I prefer standard&poors 500
2006-11-05 06:11:08 · answer #9 · answered by Anonymous · 0⤊ 0⤋
No. Rusell 5000 is.
2006-11-05 06:15:27 · answer #10 · answered by Anonymous · 0⤊ 0⤋