The Dow Jones 65 Composite Average is an index...you know, a group of securities that rep a market. In particular, it’s a group of 65 large and public companies, representing utilities, transportation, and industry (like manufacturing and construction). 30 of those stocks are the same ones in the Dow Jones Industrial Average, 20 are from the Dow Jones Transportation Average, and 15 from the Dow Jones Utility Average.
Hold up...that’s three markets in one index, though?
Yeah. Actually, the Dow Jones 65 Composite Average is price-weighted for each of those three markets, which means that each of the 65 companies’ securities in the index are weighted by the price per share. The bigger the price of your share, the more weight you’ll have in the index.
Other big indices, like the superstar Dow Jones Industrial Average, is weighted via market capitalization, which multiplies the number of shares by the price of the share. The number of shares don’t affect the Dow Jones 65 Composite Average...nope, nada. Because not all indexes (yeah, you can use “indexes” or “indices”) are calculated the same, you gotta make sure you know what’s going on with them behind the scenes to really know what you’re looking at.
The Dow Jones 65 Composite Average used to be a good measure of the economy when utilities, transportation, and industrial doings made up most of the economy. But these days, technology, healthcare, and finance are dominating the scene. So this index is, well, going out of style. It happens to the best of us.
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Finance: What is the S&P 500?45 Views
finance a la shmoop. what is the S&P 500? well the S&P 500 is just an index- that
is the standard and poors company assembled 500 stocks put them on a
spreadsheet- this was a spreadsheet in 1957 -and they tracked them. [spreadsheet pictured]
well the index had something like 37 shares of Procter & Gamble, the 23 shares
of Ford, 18 shares of IBM and so on. in the 1950s the S&P 500 totaled something
like 40 maybe 50 bucks on a good day. at the end of each day the elves who worked
inside of the S&P Factory, they would add up the shares basically ignore any
dividends and send to the press a total which was published to more or less
everyone who cared about investing. well not nearly even a century later the 40 [man reads newspaper]
to $50 reign to the SNP is today knock on the door of 2,500 .so without even
having dividends reinvested you'd have made 50 times your money with dividends
reinvested to buy more shares instead of keeping the cash to buy you know
groceries or electric massage slippers. you'd have made over 70 times your [grocery display case and slippers pictured]
original investment. welcome to America.
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