WTF is…the Dow Jones?
The Dow Jones is a “price-weighted” average of 30 significant US stocks. So basically, it takes 30 stocks that are super important to the US economy, averages them, and spits out a number which tells you generally how things are going in the market. So you can check the Dow and sort of be like “oh is the US economy ok today?"
Why is it important?
The Dow has been around since 1896 and they kick companies out all the time, which is savage but also good because it means that the Dow Jones stays relevant. Like you wouldn’t want them to be taking the average with companies that were important in 1896, lol. And, fun fact, the only company still part of the original index is General Electric.
What's the tea though?
Glad you asked. But yeah, a lot of people don’t like the Dow Jones because bigger companies like Amazon and Apple aren’t on it so they say that like, without those companies, how can the Dow measure overall market performance?
But honestly, haters gonna hate. It makes no sense for bigger companies like Apple and Amazon to be included because their share prices are so expensive.
And because the Dow is a price-weighted index, if they were included, they would completely overpower all the other stocks because the price weighted index gives higher price stocks more influence over lower-priced stocks. Like if Apple didn’t do well one day, the Dow would literally tank and that's not really a good read of the economy. So we gotta exclude them, sorry Tim (Cook).
I’m going to link some more in-depth videos below about the Dow Jones, just in case you wanna deep dive but who are we kidding—this was an amazing explanation. Like you just had the Dow Jones explained to you by Mrs. Dow Jones. Feel blessed.
If you want to learn even more about the Dow Jones, watch this video below. Anyways, gotta go brainstorm baby names with Elon Musk. Subscribe and remember—stay rich bitch.