Is the Dow Jones important?

[Anonymous No.12476933]

newfag here just learning about the stock market. I've been wondering what the Dow Jones actually indicates. Pretty much everywhere I look people say that it's stupid and flawed but considering it's quoted everywhere it has to have some worth right?

[Anonymous No.12476960]

>>12476933
It’s an index that periodically removes poorly performing stocks and replaces them with better performing stocks. Does an indicator that periodically gimmicks itself higher by design sound like a reliable indicator to you? Serious question.

[Anonymous No.12476963]

ppl talk shit on the dow but its literally the most important mainly cuz of tradition.

[Anonymous No.12476996]

SP 500 is better because its an average of 500 stocks compared to 30

[Anonymous No.12476997]

>>12476960
No, but I guess I just thought it was for something

[Anonymous No.12477077]

>>12476997
It’s a way of making people who blindly follow the markets feel ok about slowly being boiled alive, i.e. having their retirement savings chipped away at by inflation.

[Anonymous No.12477249]

>>12477077
If you can't beat inflation in stocks you don't deserve the money anyways.

[Anonymous No.12477323]

>>12476933
Dow Jones is an average of the 30 largest limited companies of the US, or rather their stock value. It and other indexes are used to get an overview of the private sector. They can be useful for catching or predicting trends.

It indicates the combined price of buying one unit of stock from each of the component companies (which are currently 3M, AmEx, Apple, Boeing, Caterpillar, Chevron, Cisco, Coca Cola, Disney, DowDuPont, Exxon, Goldman Sachs, Home Depot, IBM, Intel, Johnson & Johnson, JP Morgan Chase, Mc Donald's Merck & Company, Microsoft, Nike, Pfizer, P&G, Travelers, United Heath, United Technologies, Verizon, Visa, Walmart and Walgreens )

As you can probably see, we got banks, restaurants, store chains, fashion and IT companies in there, all with VERY different market segments and specialisations.

For example, if a food shortage is rumored, companies like Walmart or McDonald's might have a hard time, which will be indicated on the DJIA, however it would mean jack shit for you if you're only interested in Intel or Apple stock, since the IT sector does not rely on food for turning a profit. That's why overreliance on indexes like Dow Jones can be dangerous.

The reason it can be useful, is if you want to see an overview of how the most successful companies in the US are faring over time. It can also be important if conducting trade from abroad to see if trading with the US in general is favorable or not.

Most other indexes are weighted averages, unlike the DJIA... which makes for some bothersome additional calculation and work to properly interpret the values.

[Anonymous No.12477334]

>>12477249
True, I’m just saying the Dow Jones is specifically geared to trick brainlets.

[Anonymous No.12477393]

>>12477323
Very informative, thankyou

[Anonymous No.12477666]

>>12477323

um excuse me, if the breakout lounge is not stocked with food I can assure you no tech is getting built

[Anonymous No.12478807]

>>12477666
You're still obligated to work by your contract. Breakout lounge stocked with food or not.
You want to go on strike for that? You can't, as it'll likely fall under the clause of force majeure, which include most global or national crises and catastrophes.
Would you rather keep working (and be able to get food at a higher price) or end up starving and penniless in such a situaton? (you can't rely on humanitarian aid)

Also, What I meant to say is that it doesn't affect to two sectors the same.

employees in tech are also usually better paid and can recover better/easier from the shortage simply because they have a better ability to pay for food even in times of crisis.
A company like McDonald's would feel the effect directly. The food shortage cause prices to rise and cuts directly into their profits. Also McDonald's isn't able to "steer" customers toward another product like a supermarket is.

A supermarket (properly managed of course) is much more diverse in its versatility of getting a customer to choose a different product. Say the food shortage is currently on beef; as a store owner I can simply reallocate some fridge space to, say, additional chicken or fish without being afraid of getting flak from customers.
Now imagine coming into a McDonald's and being told that they don't sell any beef-based burgers today (which is most of their menu).

Also i'm from a country where it's usually customary to bring your own food in a lunchbox :)