
When assessing the health of the stock market, it’s easy to look at whatever index is ticking across the bottom of a cable business channel at that moment. Commonly, news anchors and reporters comment on the Dow Jones Industrial Average (Dow), citing milestones when new highs are hit or losses occur.
While we don’t want to demonize the Dow, we caution investors to avoid fixating on this particularly popular index. The Dow may be a poor indicator of the market overall as it only tracks 30 large public companies in the country, based on price. A price-weighted index is proportionally…