Dow Jones or more popularly known DJ is an indexing parameter to determine which company scales the top in the stock market. Dow Jones is a firm that was established in the year 1882 by Charles Dow, Edward Jones, and Charles Bergstresse. It started by assessing stocks of 12 companies back then. It has been more than a century and today’s Dow compares stocks from 30 companies.
One of the oldest, most notable products of DJ was the Wall Street Journal. The Wall Street Journal is one news publications that need no introduction. There are a few more companies like ExxonMobil(known in 1928 as standard oil), IBM(1979) and McDonald’s(1985) who have always been the top recipients of the DJ list. WalMart, Coca Cola, Walt Disney, and the Home Depot have slowly added on to the list.
The DJ company, however, did go through a few hiccups in the year 1945 due to the recession. DJ is not a company that can be directly invested. It can be used to analyze the market and can be used as a deciding parameter for investing in stocks and mutual funds. DJ has known to provide equity for 130,000 equity indexes.
HOW IS IT CALCULATED?
Calculating the DJ index is very simple. Firstly, 30 blue-chip companies that are doing well in the stock market are selected. The stick performance of all these companies are added and averaged. This average value is calculated daily and derived accordingly.
Let us examine the rise and fall of a stock exchange using a Dow Index by an example.
If the Dow has gone up by 150 points, then it means the stock has gone up by 10,500.00. If the closing value on the previous day was 10,000, then it represents a profitable rise in stocks by 105 percent. Of all the companies that Dow uses to explain the fairing of the stock exchange, the General Electric company has always been a proud recipient amongst the list of companies.
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WHAT IS DJ USED FOR?
DJ is an indexing factor used to explain the industrial average of a stock exchange. DJ index is a factor that is used to determine how a stock market has faired on a given particular day. The Dow has however been criticized for not providing daily results of a stock market early during the day.
The Dow was first established in the year 1896 at a level of 40.94 with just 12 companies contributing to the average. It did reach an all time high of 14,164 approximately in October 2007. The DJ index had also gone down during the recession of 1945. Despite all these allegations and ups and downs, it has performed consistently in broadening US markets today. Hence making it the most famous stock exchange index.
STABILITY OF DJ
All of us understand how a stock exchange work. Stocks are always subjected to market risks. Dropping values of Dow Jones exchanges has left many investors in a considerable loss. Instability of the stock has further led to different Dow values being misinterpreted to the people. The volatility of the stock market puts investors at risk.
There is a particular index chart that checks the volatility of DJ called the Dow Jones Volatility Index. The Dow Jones industrial average keeps track of the stock of 30 blue-chip companies. Market volatility can be referred to as the fall and rise of stock in the market. The rise and fall of stock are totally influenced by consumers involvement with the product.
Constant rise and fall of the stock markets leave investors unsure. An excellent read of the DJ index of a market regularly will help in minimizing the losses incurred. Investors must understand the market by thoroughly reviewing the stocks and the DJ index for a few months. This analysis helps in determining the rise and fall of a company. It also helps determine if that particular company is a viable option.
People mainly use Today’s Dow as investments and mutual funds. People study market risks carefully for a minimum of two to three months before investing in a company. As of July 2019, John Dow has closed with a record high of 200 over 27000. The Dow Jones closed for 26000 last year in 2018. Since then there has been a rise and fall of over 1000 points over the year.
Since the list of top blue-chip companies is subjected to market change and profits, there could be new blue-chip companies added. Also, the old companies can lose their name from the existing list. This change and mismatch can help a user analyze the market and invest wisely.