RS9 - Dow Jones

As I listened to the Planet Money podcast about the Dow Jones, I thought to myself why would the Dow Jones even bother posting their numbers throughout the day with all the criticism they receive.  But then I began to realize that when you flip to the news station on the television or even a stock program or go online to look at the stocks and see how they are doing for the day.... the first one you see is Dow Jones. Why? The answer is because of the legacy is has.  Dow Jones has been there for over a hundred years and is known by pretty much anyone who has the slightest sense of what the stock market is about.  

So the past few days the Dow Jones has been on the rise and newscasters are making it look pretty important saying they are breaking all time highs. The Dow Jones uses a much different calculation system then the other major averages who are much more accurate due to the new algorithms they are using.  The system Dow Jones uses is old school and has stayed old school. Also the Dow Jones does not include major companies such as Apple, Facebook, or even Google.  If these three companies are tops in the market and Dow Jones does not account for them then how can you consider Dow Jones a reliable source.  The companies they use are all on the older side and dont show an economy that is becoming more tech savvy due to the younger generations. 

The S&P 500 is a much better average as it takes in five hundred companies rather then just thirty as the Dow Jones operates.  Think about it, what will give you a better feel for how the economy/stock market  is doing? Would it be Dow Jones who averages 30 big US companies, but not including some of the best, or S&P 500 which included tops of five hundred large scale companies.  If more people knew the facts about the Dow Jones, then more people would realize that it literally is useless.  Compared to other averages the Dow Jones is nothing, because it proves nothing.  And it is pretty pathetic that the Dow Jones company gets paid to give people the wrong perception. As Dow Jones goes on to say how positive its been the past few days. If you look at the S&P 500 it is below it's all-time highs in both nominal and inflation-adjusted terms.   So Planet Money has me convinced, Dow Jones is a non-factor when determining how well the stock market is doing.