Saturday, August 25, 2007
Meaningless as Star Jones: Dow Jones and the 10% Correction
Boot the DJI
When Rupert gets the keys to the WSJ, the first thing he should do is announce that the Dow Jones Industrial Average (DJI) is outmoded, outdated, out-the-friggin'-door.
Here's why:
- It doesn't represent the overall market. - The Wilshire 5000 (actually the 6503 or whatever the number is today) is a better index of overall market health. With the DJI, when Bill Gates farts, the rest of the market starts taking GasX. No matter what history indicates. Thirty stocks can not be a good indicator going forward.
- The DJI companies don't even start trading at the same time so what's the sense of looking at the DJI until all the companies have opened?
- The MSM and cable has annointed the DJI with magical powers. It's just a number. If it goes above 14,000 what's the big deal? If it goes below 13,000 what's the big deal? The breathless reporting of the cable financial news programs giving a second by second update of movement is laughable. Who pays attention to the DJI movement?
10% correction and we're all just fine, right?
On which tablet that Moses lugged down from Mount St. Helens, wearing his Crocs (CROX), was this written? Why not a 14.92% correction? Why not a 17.76% correction?
Jaysus, they are all just numbers! Dow Star Jones drops 150! Did the bubble ass burst?
Speaking of movements and Star Jones weight loss, here's your tip for today: GOOG has a new beta product. It promises to improve downloads.
I'm GoingLikeSixty and I'll be here all weekend. Don't forget to tip your servers.
Disclaimer: If you buy GOOG because of this post, your wife's OB/GYN will start sending her thank you gifts. And you may lose money.
Agree. The Dow is meaningless however, as an overall indicator it isn't that bad considering that it moves in a similar way to the S&P500, a much larger index.
Anyway, do people your age still think about sex all the time? Just wondering and I feel strange asking my Dad that.
-DT
@dinosaur: think, then do.
Two things. One, the S&P 500 is the index everyone pays attention to in the pro world. The Dow plays Queen Elizabeth the the SPX's Tony Blair (or Brown or whomever Laborite Third Wayer is the current occupant).
Two, the Dow is actually quite correlative with the S&P 500 over it's 30 names, and therefore a decent proxy for a "diversified portfolio."
And isn't that what old folks are supposed to have to keep them from gumming on apple cores and wheat thins in their dotage?
My only problem with the Dow is I think that UPS should be in it.
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