DOW

Dow Jones(道琼斯指数)

Dow Jones was first compiled in 1884 by Charles Henry Dow (1851-1902), the founder of the Dow Jones Company, as an arithmetic average stock price index. The Dow Jones index is the oldest stock index in the world, its full name is the stock price average.

What people usually refer to as the Dow Jones Index may refer to the Dow Jones Industrial Average, the first of the four groups of the Dow Jones Index. The Dow Jones Index, also known as $US30, the Dow Jones Stock Price Average, is the most influential and widely used stock price index in the world. It is based on a representative portion of company stocks listed on the New York Stock Exchange and consists of four average stock price indices.

In the early morning of April 16, 2021, Beijing time, the Dow rose by more than 300 points, reaching the 34,000-point mark for the first time.

The average index is based on the stocks of 30 well-known industrial companies. The first was in 1884, and the full name is the stock price average index.

The four stock price averages are:

① The Dow Jones Industrial Average Index, which is based on the stocks of 30 well-known industrial companies;
② The Dow Jones Transportation Average Index based on the stocks of 20 well-known transportation companies;
③ The Dow Jones Utilities Average Index based on the stocks of 15 well-known utility companies;
④ The Dow Jones Composite Average Index, which is based on the stocks of the 65 companies involved in the above three stock price averages, is compiled.

Of the four Dow Jones stock indexes, the Dow Jones Industrial Average is the most well-known and widely reported by the mass media. and cited as a proxy for the Dow Jones Indices. The Dow Jones Indices are compiled and published by Dow Jones & Company, an American newspaper group, and published in the “Wall Street Journal” under its umbrella.

source

The Dow Jones index was first compiled in 1884 by the founder of the Dow Jones Company, Charles Henry Dow (1851-1902), and is an arithmetic average stock price index.

The original Dow Jones stock price average was based on 11 representative railroad stocks, calculated using the arithmetic average method, and published in the Daily News, edited and published by Charles Dow himself. The index aims to reflect the overall trend of the US stock market, covering finance, technology, entertainment, retail and other industries.

Since 1897, the Dow Jones Stock Average has been divided into two categories: Industrial and Transportation, with the Industrial Stock Average consisting of 12 stocks and the Transportation Average consisting of 20 stocks, and began to be published in the Wall Street Journal, a newspaper published by Dow Jones & Company. In 1929, the Dow Jones Stock Average added utilities to the index, bringing the number of stocks included to 65, and it continues to this day.

calculate

The initial calculation method of the Dow Jones stock price average index is obtained by the simple arithmetic average method. When encountering the ex-rights and ex-dividend of the stock, the stock index will be discontinuous. After 1928, the Dow Jones stock price average changed to a new calculation method, that is, the connection technology was used in the ex-rights or ex-dividends of the points counted to ensure the continuity of the stock index, so that the stock index was improved and gradually extended to worldwide.

The earliest calculation formula is: the average number of stock prices = the sum of the prices of the selected stocks / the number of selected stocks.

The calculation formula now becomes: Average of stock prices = sum of prices of selected stocks / Dow Divider, which will be affected by stock splits and company consolidation.

important position

The Dow Jones Index is the Dow Jones Industrial Average Stock Price Index, which is a stock price index with strong representation, wide application and prominent role, and is currently the most influential and authoritative stock price index in the world. The Dow Jones Average Price Index of 30 industrial stocks was introduced on May 26, 1896.

The Dow Jones Industrial Average is currently maintained by the editorial board of The Wall Street Journal, and its constituents are selected on criteria that include companies that are sustainable, large, reputable, industry-representative, and sought after by most investors. Currently, the 30 constituent stocks in the Dow Jones Industrial Average are representative of U.S. blue chips. The subtle changes in this mysterious index have brought panic or ecstasy to hundreds of millions of people. It is no longer an ordinary financial indicator, but a code name for the world’s financial culture.

One reason for this is that the stocks selected for the Dow Jones Stock Price Average are representative, and the companies that issue these stocks are well-known companies with significant influence in their industries, whose stock quotes are highly regarded by the world’s stock markets and are highly valued by investors in all countries. In order to maintain this characteristic, the stocks selected by Dow Jones for its stock price averages are frequently adjusted, replacing stocks of companies that have lost their representativeness with stocks of more representative companies that are dynamic. Since 1928, the 30 stocks of industrial and commercial companies used to calculate the Dow Jones Industrial Stock Price Average alone have been replaced 30 times, with a new company’s stock replacing an old one almost every two years.

The second reason is that the news vehicle that publishes the Dow Jones Stock Price Average – the Wall Street Journal – is the most influential newspaper in the world of finance. The newspaper provides detailed daily coverage of its hourly calculations of the average index of sampled stocks, the percentage change, the amount of transactions in each sampled stock, and takes care to correct the average index of stock prices after stock splits. The Dow Jones Stock Price Average is published every half hour during New York stock exchange business hours.

The third reason is that this average stock price index, which has never been interrupted since its preparation, can be used to compare stock quotes and economic developments in different periods, becoming one of the most sensitive average stock price indices reflecting changes in the U.S. stock market, and is the main reference for observing market dynamics and engaging in stock investments.

However, because the Dow Jones Stock Price Index is a constituent index, it includes only a very small portion of the more than 2,500 companies currently listed, and mostly popular stocks, and does not include companies in the service and financial sectors, which have been developing rapidly in recent years, so its representativeness has been questioned and criticized by people. Starting from May 25, 1996, the Dow Jones China Stock Index was also compiled for China’s stock market. As of April 1, 1998, a total of 88 stocks in Shanghai and Shenzhen were selected as its constituents, so it is called the Dow Jones China 88 Stock Index.

Founder

Charles Henry Dow, a small farmer with only elementary school education, became an outstanding financial journalist by self-education. Edward Davis Jones, graduated from Brown University and as grumpy as his red beard shows. Charles Milford Bergstresser, lost his chance to live forever in the history books because of his long surname.

In November 1882, two young journalists, Charles Dow and Edward Jones, founded Dow Jones & Company in a small office at 15 Wall Street, with all they had at the time: a typewriter and a telephone. The company’s first branch of business, is only two pages of the evening newspaper. The newsletter, called the “Evening Customer”, contained stock market-related information. In the early days, in order to save money, the two managers had to copy the content of the evening paper on 24 sheets of poor quality paper repeatedly. Soon after the company was founded, a third partner, journalist Charles Bergstresser, joined in, although the company name did not change with it.

In 1884, they launched an index containing 11 stocks. Among them were the average prices of nine railroad companies and two steamship companies, which was the prototype of the later Dow Jones index.

On July 8, 1889, the evening newspaper was changed to the Wall Street Journal, which specialized in stock information. on May 26, 1896, Charles Dow The Wall Street Journal published for the first time an index of the average prices of 30 industrial stocks, which is often referred to as the Dow Jones Index.

In March 1902, Dow Jones was sold to news magnate Clarence Byron for $130,000. Charles died in the same year, but the stock index he created has profoundly influenced the world economy, continuing to this day.

On August 1, 2007, media king Murdoch News Corporation bought Dow Jones for $5.6 billion.