LG, Sorry, but I respectfully disagree.
As a result, the divisor nowadays is a fraction, 0.24275214 in October 1998, which means that it has become, in effect, a multiplier. A one-point move in any component stock pushes the average up or down about 4.12 points. (Current divisors for each of the Dow Jones averages appear on page C3 of The Wall Street Journal every day.)
A one point move in DIS affects the DJIA the same as a one point move in IBM. This is crucial to understanding why the DJIA is substantially outperforming the S&P 500 year to date. When the puppy stocks in the Dow (CAT, AA, UK and, now, GT) are driving the "composite" to new highs, I put forth the hypothesis that it time for concern. As I said to Jim last week, the move, whichever direction, could be explosive.
TB |
