Dow or Dow Jones Industrial Average (DJIA) is the second-oldest stock market index in the history of the United States. Investors follow this stock market performance listing since it contains 30 major US-based companies.
Why investors prefer Dow?
As these businesses fall under the public trading category, it is possible for anyone to buy stocks with the help of a brokerage. There is also the opportunity to purchase assets from these companies directly.
The major difference of Dow, when compared to other stock market indexes, is that it places weight on stock prices rather than market capitalization. If a company wishes to be a part of this listing, they need to have a top-notch reputation, excellent and continual growth, and high-levels of interest among investors. It continues to trade blows with the S&P 500 when it comes to annual average returns.
However, when it comes to analyzing Dow’s performance, there is a key differentiator people need to keep in their minds. While investors consider this index to be volatile, it is different from the business risk of the organization’s part of the listing.
The companies which are part of Dow have been performing well in markets all over the world. Despite these organizations having a strong foothold, their stock price has a high chance of fluctuating during short intervals. Due to this reason, there is a high chance of experiencing short term losses and gains.
How to become a part of Dow’s long list of investors?
On top of that, there are several ways one can invest in Dow and reap the benefits. The easiest way is to purchase shares of the companies in this listing. Similarly, there are plenty of exchange-traded funds (ETFs) that follow the price fluctuations of this index. The most common ones are SPDR Dow Jones Industrial Average (DIA) and First Trust Dow 30 Equal Weight (EDOW).
Although Dow is different from other stock market indexes, it continues to remain the most popular option among investors. It retains its place as the economic and market indicator and contains stocks from major US companies.