Skip to content

CardGist

  • Credit Card
  • Reward Credit Card
  • Bank
  • Insurance
  • Featured
CardGist
  • Credit Card
  • Reward Credit Card
  • Bank
  • Insurance
  • Featured

Dow Jones – The Dow Jones Industrial Average (DJIA)

by Gist Donald

Dow Jones – The Dow Jones Industrial Average (DJIA)

Do you know the most widely followed stock market in the world? Let me tell you. The Dow Jones Industrial Average (DJIA) is the one.  Don’t be surprised that this firm comprises 30 companies all in one. Dow Jones

Table of Contents

  • The Birth of the Dow Jones Industrial Average DJIA
  • The companies still in the Dow Today
  • Criticisms of the DJ Industrial Average DJIA

The Birth of the Dow Jones Industrial Average DJIA

This firm, the Dow Jones Industrial Average was introduced on May 26, 1896. It was established by Charles H. Dow, one of the founders of Dow Jones & Company, which was formed in 1882.

Further, Dow’s first index was created in 1884. It included 11 transportation-related stocks. Also, he made some adjustments to the original index (on Wall Street, this process is known as “reconstituting”). In the end, he renamed it the Dow Jones Rail Average (in the 1970s). Later, the name was updated to the Dow Jones Transportation Average to cover the introduction of air freight and other forms of transportation).

With time, Dow discovered that industrial companies were now more widely sought after than railroads. So, he found a new index of stocks made up of twelve companies called the Dow Jones Industrial Average, or DJIA for short.

In the beginning, the index included industrial-sector companies focusing on cotton, sugar, tobacco, and gas. To sum up the reported index figures, Dow added up the stock price of selected companies, divided by the number of companies in the index at the time.

However, the first published Dow Jones Industrial Average figure was 40.94. This means that the average stock price of the twelve stocks Mr. Dow had chosen was $40.94.

The Original 12 Dow Jones Stocks

The original twelve stocks in the Dow Jones Industrial Average included the commodity-based firms below:

Then, these firms were large, profitable, and very much respected. However, some of them were replaced in the Dow Jones Industrial Average.

Changes over Time

With time, in 1916, the Dow Jones Industrial Average was updated to add 20 stocks. By 1928, the DJIA was expanded to 30 stocks, which continues to be the rule today.

After some time, a committee including S&P Dow Jones Indices reps and The Wall Street Journal editors made a decision on which companies are included in the Dow Jones Industrial Average.

Actually, you won’t find any rules for Dow inclusion. You will only see a set of broad guidelines that demand large, respected, substantial enterprises that represent a significant portion of the economic activity in the United States.

The companies still in the Dow Today

Do you know that the most recent update to the index took effect on August 31, 2020? Then, they added Amgen, Honeywell, and Salesforce while ExxonMobil, Pfizer, and Raytheon were removed. At present, the 30 Dow component companies are:

Symbol   Name

AXP      American Express Co     

AMGN    Amgen Inc

AAPL     Apple Inc           

BA   Boeing Co  

CAT    Caterpillar Inc      

CSCO    Cisco Systems Inc           

CVX   Chevron Corp       

GS    Goldman Sachs Group Inc 

HD     Home Depot Inc  

HON     Honeywell International Inc       

IBM     International Business Machines Corp    

INTC      Intel Corp          

JNJ     Johnson & Johnson     

KO    Coca-Cola Co         

JPM   JPMorgan Chase & Co      

MCD   McDonald’s Corp             

MMM   3M Co  

MRK   Merck & Co Inc   

MSFT   Microsoft Corp 

NKE   Nike Inc                 

PG   Procter & Gamble Co          

TRV   Travelers Companies Inc  

UNH   UnitedHealth Group Inc  

CRM    Salesforce Inc     

VZ    Verizon Communications Inc          

V    Visa Inc       

WBA   Walgreens Boots Alliance Inc       

WMT   Walmart Inc       

DIS    Walt Disney Co     

DOW   Dow Inc

Criticisms of the DJ Industrial Average DJIA

From their calculation, a stock with a $100 share price would have five times the influence on the DJIA as one with a $20 share price. This is so even if the latter company had a market cap that was 10 times as large.

No wonder a firm like Berkshire Hathaway (BRK/A), which usually trades at over $250,000 per share, couldn’t be added to the Dow without any change in the formula because it would instantly represent the entire index.

This problem became obvious when companies announced stock splits and other transactions that change their nominal share price. For a firm still starting, they can make their shares affordable and even double their stock outstanding by splitting 2-1.

$80 stock falls to $40, but there will be outstanding shares. For the Dow Jones Industrial Average, this will result in the DJIA falling even if the stocks increased in value.

However, to reduce the losses, the divisor of the DJIA is always modified for corporate events and transactions like special dividends and stock splits.

On the other hand, many critics speak against the practice of disregarding the overall size of a firm, focusing instead on a meaningless nominal value that can be modified through share repurchases or issuance. A lot of professional money managers make use of the S&P 500, the overall market capitalization.

Conclusion

This firm has been changing constantly within the past 100 years. This change will continue to manifest as the economy shifts. Carefully review everything about the firm.

I hope you got value. Please keep your questions in the comment section.

Social Media: Facebook, Twitter, Wikipedia, LinkedIn, Pinterest

Check Out This Post:

  • ANN Taylor Credit Card Login Online | Pay Bills Online
  • Tinker Federal Credit Union Reviews | Locations, Login, Hours
  • MidFlorida Credit Union Review | Locations, Near Me, Hours, Routing – Midflorida Credit Union Amphitheatre
  • Tinker Federal Credit Union Reviews | Locations, Login, Hours
  • Sewage Cleaner Job in USA with Visa Sponsorship  – Apply Now

Related posts:

  1. ETRADE PORTFOLIO LOGIN TO INVEST AND TRADE
  2. Charles schwab Login – Charles schwab Account Login
  3. Nordstrom Bank Login: How To Login Online
  4. Regions Bank Login – Bank Online Services
  5. Best CD Rates For December 2022
  6. Amex Trueearnings Costco Credit Card Login | Pay Bill
  7. ACE Elite Card Login | Pay Bills, Withdrawals online
Categories Bank Tags bank, bank login, Credit Card, Dow Jones, Dow Jones Industrial Average, Industrial Average, insurance
Walmart Credit Card Login Online | Apply Now
Activate Credit Card Bank of America
  • Credit One Credit Card Login Online | Apply Now
  • Credit Card Login, Payment, Customer Service Page
  • Having Trouble Logging In
  • AmericanExpress.com Confirm Card (2023 AMEX Card)
  • Barclaysus.com/activate code, Barclaycard Bank Login
  • How to Check an Apple Gift Card Balance (2022)
  • Upstart Login at Upstart.com My Offer
  • USBankCardOffers.com: With Promotional Code (2022)
  • Pex Cards Login – Register, How PEX Cards Work (2023)
  • MyMilestoneCard com activate: Milestone Credit Card Guide
  • Bank
  • Bill Payment
  • Blog
  • Credit Card
  • Credit Union
  • Featured
  • Insurance
  • Personal
  • Reward Credit Card
  • Bank
  • Bill Payment
  • Blog
  • Credit Card
  • Credit Union
  • Featured
  • Insurance
  • Personal
  • Reward Credit Card
  • Credit One Credit Card Login Online | Apply Now
  • Credit Card Login, Payment, Customer Service Page
  • Having Trouble Logging In
  • AmericanExpress.com Confirm Card (2023 AMEX Card)
  • Barclaysus.com/activate code, Barclaycard Bank Login
    • Having Trouble Logging In
    • Contact Us
    • Credit Card Login, Payment, Customer Service Page
    • Sitemap
© 2023 Cardgist.com