Who cares about the DOW?

[jonbig04]

Out of curiosity, why do news agents, people, business channels etc all follow and quote the DOW? Isn't the S&P a far broader picture of our economy as a whole (which is always what they are talking about). I'm sure there are some advantages to the DOW, but in macro terms, shouldn't they be more concerned with the S&P? I don't care, just something I was always curious about.

 

[Pekelo]

tradition...

 

[Bolimomo]

Quote from jonbig04:

Out of curiosity, why do news agents, people, business channels etc all follow and quote the DOW? Isn't the S&P a far broader picture of our economy as a whole (which is always what they are talking about).

"DOW" is much easier to pronounce than "Ass And Pee".

It's just more ear-catching.

Surprisingly, a read on 30 stocks can be so similar to the read on 500 stocks on a daily percentage basis. (Very roughly: 10 Dow points = 1 S&P point)

 

[Rabbitone]

News media for the last 100 years has used the Dow as the standard and icon for how well the stock markets are performing. It is what the average “Joe” uses as his image of markets. In most papers headlines for the last 50 years they have all been about the Dow’s ups and downs. It is what people expect to hear about market movement. When was the last time you saw a big drop in the S & P 500 on the front page...

 

[doli]

Inter-index arbitrage makes the DOW relevant, if only because it traces out the same chart as the S&P 500.

 

[damon_achey]

also up 235 sounds so much more impressive than up 26 in their reports

 

[jonbig04]

So there is no good reason lol

 

[TraderSystem]

Please have a look here, this might help you:

• http://www.elitetrader.com/vb/showthread.php?s=&threadid=102124
• http://www.elitetrader.com/vb/showthread.php?s=&threadid=154713
• http://www.elitetrader.com/vb/showthread.php?s=&threadid=143772

Considering S&P 500 versus DOW, got the following links via google search:

• http://www.marketwatch.com/story/is-dow-sp-500-a
• http://www.crossingwallstreet.com/archives/2006/05/dow_vs_sp_500.html
• http://www.portfolio.com/views/blogs/market-movers/2008/03/17/the-dow-sp-500-divergence
• http://bigpicture.typepad.com/comments/2007/04/which_is_perfor.html

 

[bradleyt]

It's definitely all about tradition and just what the common man can understand and recognize instead of some "new fangled" tracking system but others can just look up the S&P that need to.

 

[Moc Yeah]

Quote from bradleyt:

It's definitely all about tradition and just what the common man can understand and recognize instead of some "new fangled" tracking system but others can just look up the S&P that need to.

does it really matter? With all the FASB changes, mark to fantasy balance sheets, and toxic "we hid them" assets. It makes NO difference. Besides, when a company is sucked down to $1 land... they just throw in a midcap hummer and bury the Dow dog in the dirt.