1992 was the end of an era for the Dow Jones. That was the year it stopped using the “theoretical Dow Jones Index.” And investors everywhere wept. Actually...no one wept, because the system that replaced it was much better and faster.
The theoretical Dow Jones index provided a rough, kind of blurry snapshot of a trading day. It was based on calculations that assumed all stocks on the index hit their high and low prices at the same time. Which (let’s be real) doesn’t happen. So while the index could give us a ballpark idea of trade activity on a given day, the highs on the index looked higher and the lows looked lower than they were in real life.
Today, this index has been replaced by a high-tech rolling index that updates every ten seconds. It’s much more accurate than its predecessor, which helps investors be more accurate as well.
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Finance: What is the Dow Jones Industria...2710 Views
finance a la shmoop- what is the Dow Jones Industrial Average? well it's just
an index. it's a basket of 30 industrial stocks hence the catchy industrial word [list of the 30 stocks involved in the Dow]
in there and it was started in 1896 by Charles Dow and Edward Jones sort of the
Coke and Pepsi of stock averages in the day .worth noting is the fact that while
the Dow average is quoted often in the press it's not something that real Wall
Street traders really rely on that much as a market place holder anymore. why?
well because the Dow comprises only 30 stocks. it isn't really a broad market [Dow Jones in the trash]
representation, and you know the way the S&P 500 is the 500 is bigger than 30. Big
Brother has way more stocks and is thus way more liquid than the relatively
blippi set of 30 stocks that the Dow offers. over time the Dow has changed as
companies were bought and/or died and or just withered and became no longer
relevant. i.e. newspaper industry. which means that this thing has gone through
more faces than Kanye West .yeah. [Kanye West faces pictured]
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