Index Dow Jones value for the stock market

The introduction of the index meant a small revolution in the exchange activity. Now I could understand whether the market moves up or down, to identify patterns and dynamics. Dow metaphorically compared the index with their sticks on the sand beach, which lay at the edge of the surf, one after another, to determine for each of the next wave - will the tide or low tide. "In order to distinguish the tide, - said the Dow - you can stick sticks in the sand at the place where the wave ends its run." If the peaks and troughs index climbed high enough, then it means that stock prices of the largest companies have grown, and with them and quotations of the securities of other companies. That is the economy booming, the company's profits grow, investors are willing to invest in their shares. If the index fell lower and lower, it is meant to alarm investors.

With the new funds could distinguish short-term trends from long-term and in accordance with this build trade policy. The index proved to be simple and convenient reference point for comparing individual stocks with the market rate. The investor the opportunity to compare the market with other indicators of the economy.

What happened next?

In 1916 the DJIA increased to include the shares of eight companies and 12 years later there are now 30 companies, and this number is not changed to this day. Later with the development and complexity of the securities market has become necessary in some improvement of the principle of calculating the index. In 1928 the technique had been introduced change: we introduce a special factor (current divider), designed to prevent the distortion of values caused by stock splits, dividends, changes in the list of companies.

In 1929, long after the death of Mr. Doe, who died in 1902 at the age of 50 years, turnover has been introduced an index of utility companies Dow Jones Utility Average. Initially it consisted of 20 shares of utility companies, specializing in gas and electricity. Then the number of companies on the list was reduced to 15 and subsequently did not change.

In 1970 the name was revised most of the first index Dow Jones Railroad Average. Since the listing of "train" index included at the time as shares of airlines and other carriers, it became known as "traffic" - Dow Jones 20 Transportations Average.

Thus, today there are four types of index Dow Jones. Indicator 30 Industrials, which include industrial companies (he is considered the most important) Indicator 20 Transportations - transport index; Indicator 15 Utilities - utilities index, and the overall index that combines the previous ones, which is called the 65 Dow Jones Composite Average.
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