A Look at the Dow Jones Industrial Average

What is the Dow?

The Dow Jones Industrial Average (DJIA) is a stock market index that tracks the performance of 30 large, publicly owned companies in various industries. The DJIA is owned and published by Dow Jones Company (a subsidiary of News Corp) and is one of the most widely followed equity indices in the world. The Average was created by Wall Street Journal editor and Dow Jones co-founder Charles Dow (no relation to Dow Jones Company). Dow created the index back in 1896 as a way to measure the average change in stock prices of leading companies.

DJIA and its components in 2017

The average currently has 30 components, which are listed below. All of the stocks currently listed are American companies that are traded publicly on the New York Stock Exchange (NYSE). 3M - Manufacturing (Consumer Goods) American Express - Financial Services (Banking and Insurance) Apple - Technology (Computer Hardware and Software) Boeing - Aerospace and Defense (Aviation) Caterpillar - Heavy Construction (Construction) Chevron - Oil and Gas (Energy) Cisco - Technology (Computer Hardware and Software) Disney - Media (Entertainment) Ford - Auto (Automotive) General Electric - Diversified Industrials (Engineering and Construction) GE Healthcare - Healthcare (Medical Equipment and Services) Hershey - Food and Beverage (Consumer Goods) Intel - Technology (Computer Hardware and Software) Johnson & Johnson - Healthcare (Medical Equipment and Services) JPMorgan Chase - Financial Services (Banking and Insurance) Exxon Mobil - Oil and Gas (Energy) Merck - Healthcare (Medical Equipment and Services) Microsoft - Technology (Computer Hardware and Software) Nike - Consumer Goods (Textiles and Apparel) Pfizer - Healthcare (Medical Equipment and Services) Procter & Gamble - Consumer Goods (Textiles and Apparel) United Technologies - Aerospace and Defense (Aviation) Verizon - Communication (Telecom) Walmart - Retail (Consumer Services)

How to read the Dow?

The Dow is a price-weighted index, which means that each component is assigned a certain number of points that is proportional to its share price. The DJIA is quoted in dollars and changes as a percentage of its current value. For example, if the current Dow is 26,987 and Company A has a share price of $100, it will be worth 0.26% ($100/$26,987) of the average. That is roughly $26,987/$100, or 0.02729% share in the average.

Why should you care about the Dow?

The Dow Jones is one of the most well-known indices in the world, and it is commonly used as a barometer of overall market sentiment. It is probably the most widely followed index in the investment world, and it is often used as a gauge to determine the overall health of the market. The Dow is also regularly reported by major news outlets, so it’s a good way to keep track of developments in the stock market and how certain companies are performing. It is also often used as a benchmark to measure the performance of investment managers. If your investment portfolio has outperformed the Dow, you can expect plenty of attention from your friends and family.

How will the Dow react to President Trump's actions?

President Trump’s actions will likely be a net positive for the market, but not for long. There are two ways in which his policies will benefit the market now, but both will diminish over time. First, President Trump’s policies will increase corporate earnings. This is because tax cuts, deregulation, and infrastructure spending will lead to higher growth and higher corporate profits. However, these policies will not be beneficial in the long run because they will lead to higher interest rates. Higher interest rates will make it more expensive for businesses to borrow money and will make stocks less attractive compared to other investments. Second, President Trump’s policies will boost consumer sentiment, leading to increased business and consumer spending. This will be a short-lived boost, however, as the Federal Reserve will soon raise interest rates to prevent inflation.

Will President Trump's actions benefit or hurt investors long-term?

President Trump’s actions will likely benefit investors in the short run, but they may hurt investors over the long term. Most of President Trump’s policies are short-term, election-related strategies that will boost corporate earnings but do not provide any real long-term economic growth. The main reason why President Trump’s actions will hurt investors, in the long run, is that they will lead to inflationary pressures. Higher government spending, higher interest rates, and a stronger dollar will lead to higher inflation, which will erode the purchasing power of investors’ savings.

Final Words

There are several ways to invest in the stock market, and there is no single way to guarantee high returns. While it is true that the market provides long-term returns, you need to be prepared for volatility in the short term. If you want to become an investor, you should start saving money, diversify your investments, and read as much as you can about the markets. There is no better time than now to start learning about investing in the stock market.