Categories

Stocks

Tools

  • Economy & Politics
  • Investing
  • Personal Finance
  • Related Posts


    Is The U.S. Stock Market Unhealthy?
    GoDaddy IPO Is One To Avoid In 2015
    The Five Best Penny Stocks To Buy For 2015
    Visteon Eyes $3.6 Billion Sale Of South Korean Unit
    BioMarin To Buy Prosensa In $840 Million Deal
    Fashion Chain Gap In Deal With Online Retailer Zalando
    Aviva Shares Fall, Friends Life Jumps 7 Percent On Merger News
    Global Stocks Grind Higher After Central Bank Stimulus Signals
    Apple Launches Massive Two-week (RED) Campaign
    The S&P’s GAAP P/E Ratio Rises Above 19X
    Nutanix Beating EMC By Cutting Customer IT Costs 62%
    10 Companies Smack Down Wall St. Analysts
    Apple’s New Barrier: $118.54
    More Gains, More Volatility, In 2015: JPMorgan Funds
    Inventory Surges At Ann Taylor Brand


    The Dow Jones Industrial Average Is A Big Lie

    The Dow Jones Industrial Average is the most inaccurate and distorted of all stock indices – and yet it remains the most followed stock market index.

    Many of the Dow’s flaws are well-known, but that hasn’t stopped people who should know better from following its every move.

    There are plenty of reasons why the retail investor needs to take the Dow Jones Industrial Average with a grain of salt.

    Even the most basic aspects of the DJIA are flawed. When Charles Dow created the index in 1896, it consisted of 12 companies. In 1916 the number was increased to 20, and in 1928 increased again to 30, where it has remained.

    In both of those cases, and more than 50 times in the history of the Dow Jones Industrial Average, the component companies were changed. Such changes led to the creation of a clunky method to keep the index price consistent, the “Dow Divisor.”

    Click to read the full story

    Discuss this Story:

    Comment Policy: We encourage open discussion. Comments including racist statements, profanity, name calling or spam will be removed at our discretion. We use filters for spam protection. If your comment does not appear it is likely because it violates the policy.

    Brace Yourself For A Below-average Christmas
    Three Portfolio Moves To Boost Your Sex Drive
    How Digital Currency Could Transform Our Lives
    122 Tonnes Of Gold Secretly Repatriated To Netherlands
    Swiss Gold Initiative: Good Idea With Unintended Consequences
    The Massively Crowded ‘Long-USD, Short-Treasuries’ Trade Just Got Crowded-er
    This Investment Will Suffer From A Major Chinese Move
    Silver Prices In 2014 Driven By These Two Factors
    Some Fund Managers See Oil Falling To $60 Without OPEC Cut
    Stock Futures Point To Higher Open On Merger Activity
    China Corruption Watchdog Launches Inspections, Eyes Sinopec
    Carlyle Seeking $5 Billion For Fund With Longer Life
    RenaissanceRe To Buy Platinum Underwriters For $1.9 Billion
    Futures Higher, Building On Recent Gains
    Tesla Says In Talks With BMW Over Car Batteries, Parts
    Fund Boards, Management Go On High Alert Around Bond Liquidity
    Cutting The Cord: A New Move From Verizon
    How Retailers Are Using Tech For The Holidays
    Gold Is Cheap. Is That Good?
    Bill Dudley Explains Why The New York Fed Is Not A Subsidiary Of Goldman Sachs
    Goldman’s Two-Word Summary Of The PBOC Rate Cut: “Slightly Useful”
    Gold Repatriation Stunner: Dutch Central Bank Secretly Withdrew 122 Tons Of Gold From The New York Fed
    Gold Tops $1200 As China Cuts, Draghi Jawbones
    Shocking Pictures Of A Russian Potash Mine Disaster
    Wall Street Stunned As Iceland Dares To Jail Banker Involved In 2008 Crash
    Stability Vs Opportunity
    3 Things Worth Thinking About
    Now You Can Download Wall Street’s Favorite Networking Tool
    The World’s Oldest Monopoly Is Finally Coming To An End
    The Return Of The Dollar
    Read more from Investing...

    Liberty Investor Digest

    Get today's most important
    financial headlines all in
    one place by email!



    Sources


    close[X]

    Sign Up For Liberty Investor Digest™!

    Get Liberty Investor Digest FREE By Email!

    Input your name and email address in the fields below and get today's most important financial headlines sent straight to you inbox!

    Privacy PolicyYou can opt-out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.