Page 21 - Trading #101 Course – PART II TWO: SUCCESSFUL TRADING PIE – www.traderscoach.com

TRADING #101 COURSE – PART II TWO: SUCCESSFUL TRADING PIE – WWW.TRADERSCOACH.COM

Dow Jones Industrial Average

The Dow Jones Industrial Average (DJIA or Dow) was started in 1896 by Wall Street
Journal editor Charles Dow and is now owned by the S&P Dow Jones Indices. The Dow
has come to be known as a barometer of the overall health of the U.S. economy, and
the world economy. The original group of companies listed on the DJIA in 1896
consisted of 12 stocks.

General Electric (GE) is the only stock from the original 12 that remains on the current
list today. Over the years and decades stocks have been removed from the Dow and
new ones have been added. Even GE was dropped in 1898, only to be reinstated nine
years later.
The original list of 12 stocks grew over the years to 20 and then to the current list of 30
stocks. This increase in the number of stocks listed on the index reflected the expanding
U.S. economy.
You can see what the current stocks on the DJIA index are by looking at Table 10.3.

The sector and industry classification system used for the DJIA is the Industry
Classification Benchmark (ICB). The ICB system is similar to, but different from the
GICS system, seen in Table 12.2, that is used to classify the S&P 500 index.

If you are interested in stocks and have not yet visited the DJIA website, it is well worth
your time to visit. It has extensive historical information about the U.S. stock market
over the past 100 years and is, in a word, fascinating. The website link is:

• https://us.spindices.com/
The steady rise of the DJIA over the past 100 years, despite significant downturns from
time to time, has led many investors to adopt a buy-and-hold strategy, believing they
could consistently gain 10 percent on their money per year over time provided they
stayed in the market long enough.

See Table 10.4 for a time line of the value of the Dow over the years. The Yahoo!
website has a thorough listing of all Dow numbers from 1929 until the present. The
website link is:

• http://finance.yahoo.com/q/hp?s=%5EDJI
For historical and current DJIA open, high, low, close and volume numbers use this link:

• https://finance.yahoo.com/quote/%5EDJI/history

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