So this is for the
!Stock Picking Discussion #
Forum because as it turns out a lot of people who might want to invest don't know what those news-making indexes are or why they
should or
should not matter.
The attached article below is a link to a Google Spreadsheet document that calculates the
Dow Jones Industrial Average live. You can click around in the cells to see how it's calculating to come up with the number talked about on the news. Their's lots to say about this one, so I'm going to thread comments below to explain more...
DJI
Components,$26,950,$26,935.07,14.920 ,0.06%
Market,Company,Ticker,Current Prices,9/22/2019,0.1483289258205
NYSE,3M Company,MMM,$166.76,$166.94,(1.214),(0.73%)
NYSE,American Express Company,AXP,$118.24,$116.80,9.708 ,8.31%
NASDAQ-GS,Apple Inc.,AAPL,$218.72,$217.73,6.674 ,3.07%
NYSE,Caterpill...
docs.google.com
FAQ 1: Can I buy shares of the Dow Index?
Yes and No. I don't want to get too far into the weeds here, but through the magic of #MutualFunds (what Funds are will be a different post), and some of them being listed on the #Exchanges as #ExchangeTradedFunds, people can buy and sell "shares" of something closely resembling the DJIA.If you were to buy a single share of the DJIA today (as of the time of this writing). it would cost you $3,996.67 to get 1 share of each of the 30 companies in the DJIA.
So why the hell is the DJIA on the news valued at 26,949.99? Well, when they first made up this index, everything was different. Some companies have a stock price grow pretty high, and to lower its price they "split the shares"; if the split is 2 for 1, people have twice as many shares but the price of each share is half of what it was before the split. The lower price makes it easier for most people to buy or sell its shares. However, the DJIA would be wrong to report that newly lowered price which just halved so they came up with a divisor trick that would correct the true value that the index would be at if it didn't split, and to also include the value of cash dividends when companies pay them (what dividends are will be a different post).
If you put in thought about that Dow Divisor, you can see how keeping it up would be a real mess. In my own opinion, the DJIA is no longer a reasonable index to measure the health of the markets and it should be done away with like turnips at holiday dinners; can't we all start having sweet-potato pie instead?
Another fun fact is that sometimes they kick companies out of the index and bring in new ones. Check out the Wikipedia page for details.