Why the Dow?
  • Performance - long-term historical performance highly correlated w/S&P 500
  • Their Name - most recognized, continuously published since 1896
  • Familiarity of Components - substantial blue chip cos. - quality & acceptance
  • Diversification - unsystematic risk is reduced w/30 cos spread among industries
  • Convenience & Cost Savings to Investor - diversification investors need
  • Commitment - licensing for DJIA use in connection w/financial products
Number of Companies comprising index 30
Wide Recognition, Blue-Chip Composition and Diversification Accounts for more than 25% of the investable U.S. market as measured by Dow Jones U.S. Total Market Index.
Symbol DJIA
Weighting Scheme Price Weighted (most other indexes’ weightings are affected by both price changes and changes in the number of shares outstanding) www.djindexes.com
Review Frequency As Needed (usually only after corporate acquisitions or other important shifts in a company’s core business)
Inception of Index May 26, 1896
Companies
(as of December 1, 2005)
AIG, Inc. Honeywell
Alcoa IBM
Altria Group, Inc. Intel
American Express Johnson & Johnson
AT&T Inc. JP Morgan Chase
Boeing McDonalds
Caterpillar Merck
Citigroup Microsoft
Coca Cola Minnesota Mining & Mfg.
Dupont Pfizer, Inc.
Exxon Mobil Proctor & Gamble
General Electric United Technology
General Motors Verizon Communications
Hewlett Packard Wal-Mart
Home Depot Walt Disney
 
 
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