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WWW.CNBC.COM

The Dow briefly crossed 40,000 for the first time on Thursday.

 

Of course, I thoroughly agree with this:

 

WWW.CNN.COM

The Dow Jones Industrial Average is, at best, an imperfect barometer of stock market activity among a narrow band of very large US companies. It’s clunky, and too limited in scope for any Wall Street pros to pay serious attention to it. 

 

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The Dow Jones Industrial Average is, at best, an imperfect barometer of stock market activity among a narrow band of very large US companies. It’s clunky, and too limited in scope for any Wall Street pros to pay serious attention to it.

 

Nevertheless, the Dow persists.

 

 

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Serious traders sometimes look down their nose at the Dow because of the way it ranks companies by share price, rather than by market capitalization, like the S&P 500 does. Market capitalization measures the total value of a company on the stock market.

 

In the Dow, a smaller company with less relevance to the economy can outweigh a bigger company. In its current iteration, for example, the Dow deems Goldman Sachs — a Wall Street bank with almost no consumer-facing business, valued at about $125 billion — more important than Apple, a nearly $3 trillion tech behemoth with a billion customers.

 

 

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