What is Dow Jones?
The Dow Jones index is the most famous stock index in the world.
The official name of the Dow Jones Index is the Dow Jones Industrial Average.
This index shows the price development of the 30 most important stocks on the New York Stock Exchange or Wall Street.
It was founded in 1896 by Charles Dow and Edward Jones.
Where it initially consisted of only 12 companies, it has now been expanded to 30 companies.
Companies included in this index are, for example, Apple, Nike and Microsoft.
Despite the fact that this index is under discussion from time to time, this index is used as a gauge of the economy.
Of course, the Dow Jones Industrial Average is not the only US stock market index.
Two other well-known indices are the S&P 500 and the Nasdaq.
The former stands out because it is a much broader index, while the Nasdaq focuses significantly (but not exclusively) on technology stocks.
However, it is still generally accepted that the Dow Jones Industrial Average is an important indicator of the price evolution on the US stock markets.
The oldest US stock index
The Dow Jones is the oldest stock index in the United States.
The index is also known as the Dow Jones, the Dow 30 or simply the Dow.
The abbreviation DJIA is also used regularly.
Many Americans, and Europeans, take a look at the closing position before going to sleep.
The history of the Dow Jones
The history dates back to the 19th century.
It was published for the very first time in 1896.
And the index was then 40.94. This was a direct average of the prices of the then 12 stocks.
Then in mid-2018 with the departure of General Electric, all 12 companies were taken over, went bankrupt or simply fell into obscurity.
At the moment, therefore, none of the original participants are included in the index anymore.
Times change and so do the compositions of the stock market indices.
The Index Committee of S&P Dow Jones Indices determines the composition of the index.
The only criterion here is that the index must be as representative as possible a reflection of American business.
The committee members select 30 listed companies for this purpose.
A logical question is whether such an adjustment in the composition of the Dow Jones Industrial Average happens often.
In practice, this turns out to be better than expected.
The current composition of the Dow Jones
The following 30 companies are currently included in the Dow Jones Index.
3M Co. (NYSE: MMM)
American Express Co. (NYSE: AXP)
Amgen (NASDAQ: AMGN)
Apple Inc. (NASDAQ: AAPL)
Boeing Co. (NYSE: BA)
Caterpillar (NYSE: CAT)
Chevron (NYSE: CVX)
Cisco Systems (NYSE: CSCO)
Coca-Cola Co. (NYSE: KO)
Dow Chemical (NYSE: DOW)
Goldman Sachs Group Inc. (NYSE: GS)
Home Depot Inc. (NYSE: HD)
Honeywell International (NYSE: HON)
Intel Corp. (NASDAQ: INTC)
International Business Machines Corp. (NYSE: IBM)
Johnson & Johnson (NYSE: JNJ)
JPMorgan Chase (NYSE: JPM)
McDonald’s Corp. (NYSE: MCD)
Merck & Co. Inc. (NYSE: MRK)
Microsoft Corp. (NASDAQ: MSFT)
Nike Inc. (NYSE: NKE
Procter & Gamble Co. (NYSE: PG)
Salesforce.com (NYSE: CRM)
The Travelers Companies, Inc. (NYSE: TRV)
UnitedHealth Group Inc. (NYSE: UNH
Verizon Communications Inc. (NYSE: VZ)
Visa Inc. (NYSE: V)
Walgreens Boots Alliance (NASDAQ: WBA)
Wal-Mart Stores Inc. (NYSE: WMT)
Walt Disney Co. (NYSE: DIS)
It is possible to invest in individual shares of the companies included in the Dow Jones, or in trackers (ETFs) of the Dow Jones.
If you buy shares in a company that is in the Dow Jones Index, you become, as it were, co-owner of the company and you get a say at the General Meeting of Shareholders.
As mentioned, you can also invest in ETFs (trackers) on the Dow Jones.
ETFs track the entire index, not individual companies.
Depending on the performance, ETFs yield a certain return.
Since its inception in 1896, the average return of the dow jones industrial average has been around 10% per year including dividend.
So considerably more than gold, a savings account or real estate.
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