Dow Jones Industrial Average, the DOW, closed today at 28,256.03

[Prosper]

Does anybody really know what to do with that information. The real average of the 30 DOW stocks is about 136. The DOW advertised 28256.03 comes from multiplying the real average by a multiplier that DOW devises. I have researched casually for years trying to find out how the DOW is used. When the real 30 DOW stock’s average is 136 what information is gained by multiplying it to get 28256.03. Is it to support the bull market by influencing trades with the ever growing DOW while the real average at 136 has been relatively stable. If anybody knows what the DOW means and how to apply it and would share that would be a great public service.

[empedocles]

1. Can't answer your valuation question. However, on the Dow and the virus, it can be interesting.

The virus and this sharp drop, may be enough to put pressure on the artificial, over inflated,l trump stock market bubble.

The virus, will take about a month, to get a handle on. In the meantime, the virus is serious. Could be trouble for trump, who likes to brag the market.

[klook]

2. Blue Line Jumps 11 Percent

https://www.theonion.com/blue-line-jumps-11-percent-1819565647

NEW YORK–Excitement swept the financial world Monday, when a blue line jumped more than 11 percent, passing four black horizontal lines as it rose from 367.22 to 408.85.

It was the biggest single-day gain for a blue line since 1994.

"Even if you extend the blue line's big white box back many vertical lines, you won't find a comparably large jump," said Milton Vogel, a senior analyst with Merrill Lynch. "That line just kept going up, up, up."

More at link above

[unblock]

3. Real investors rely on metrics that make more sense, like the s&p500.

The Dow just adds up the stock prices of the 30 chosen stocks, which is pretty arbitrary because that doesn't reflect market capitalization or anything else of utility really, it's very much a function of how many shares the each company arbitrarily decided to issue.

The multiplier is used to keep the index consistent when they change the 30 chosen stocks or when one of them splits. If a company split two for one, it's stock price would cut in half. This would artificially cause the Dow to drop, so they adjust the multiplier to cancel out that effect. But from that day forward, that stock has half as much influence on the index because all its movements are cut in half. The fact that investors have twice as many shares isn't reflected in the index.

It's really only reported out of tradition, which is actually quite remarkable.

[tinrobot]

4. The number is actually not an 'average', it is a sum

They add up all the values of the stocks to get the price of the index. On top of that, they have to correct for things such as stock splits, so the stocks are multiplied by a number that correlates to those shifts in price. They also have to account for companies that fall out of the index and are replaced by new ones. Some companies have been in the index for 80+ years, some less than a decade.

Needless to say, it gets complex. Overall, it is not a good index to judge the overall health of the economy. I think the reason it is used is simply because it is the oldest index still in use, so it roughly represents a historical record going back to the late 1890's.

[Midnight Writer]

5. My 409k sure suffered today.

[Liberal In Texas]

6. Just wait. The major airlines of the world are stopping flights to China.

Next, the jillions in imports from China are going to stop or be severely cut back.

When that happens, the markets around the world are going to have an aneurysm.

Get the f out of the stock market, it's a house of cards.


.

[Prosper]

7. Thanks. I never could see a reason to inflate the DOW number

to almost 200 times the average price of the DOW portfolio of 30 stocks. I am using my phone and when I went to the link the top part was cut off and I didn’t see Onion. I thought I was really seeing some new information. When the other colors of lines came I thought nothing introduced that many variables. That’s when I saw “The Onion”. Pretty good.