What is The Dow Jones Industrial Average (aka The Dow)?
The Dow Jones Industrial Average (DJIA), more commonly referred to as “The Dow”, is a collection of 30 stocks that are traded on the stock exchanges.
When one asks, “What is the Dow doing today?”, they are wondering how this collection of 30 stocks are performing on any given day.
The Significance of “The Dow”
The Dow is one of the major indices currently in existence, and many investors track the market’s performance based on the Dow’s results. The significance of whether or not it is up or down is that the stocks that make up the DJIA are usually a good indicator of general market trends.
As a general rule of thumb:
- If the Dow is up, there is a good chance that the general market as a whole is up.
- If the Dow is down, there is a good chance that the market is down too.
By tracking the performance of only these 30 stocks, investors attempt to discover general market trends.
What are the typical characteristics of companies that make up the Dow Jones Industrial Average?
- Large market caps
- Industry leaders
- Longevity of time in business
Keep in mind these are not the end-all, be-all characteristics, but rather a general synopsis of the Dow make up .
What Stocks Make up The DJIA?
Below are the companies currently part of the Dow Jones Industrial Average. As you can see, these are some of the largest companies in the United States.
You can find more info about these stocks at FinViz.com.
American Express $AXP
Cisco Systems, Inc. CSCO
Dow Chemical DOW
Exxon Mobile XOM
Goldman Sachs GS
Home Depot HD
International Business Machine IBM
Johnson & Johnson JNJ
JP Morgan Chase JPM
Merck & Co. MRK
Procter & Gamble PG
United Health Group UNH
United Technologies Corporation UTX
Visa, Inc. V
Walgreen Boots Alliance WBA
Walt Disney DIS
You Should Own These Companies
The best thing about the Dow Jones Industrial Average is that it gives you a great starting place to invest. I personally own many of these stocks in my portfolio, and you should too.
The key is to not just blindly invest into stocks, but to invest with eyes wide open. Once proper valuations present themselves, we look to buy. With our stocks on DRIP, we cannot go wrong!
So What is the Dow Jones Industrial Average?
The next time you are asked “What is the Dow Jones Industrial Average?”, you’ll know the answer.