Dow Jones Industrial Average or simply known as Dow Jones is a stock market index. It measures the thirty large companies listed on the stock exchanges of the United States of America. The index’s value is the total of the stock prices of the companies included by IDXDJX: DJI at https://www.webull.com/quote/idxdjx-dji divided by a factor which is currently 0.152. This factor changes when the constituent company goes through a stock split to keep the index safe from the stock split.
Despite being one of the most equity indices, Dow Jones cannot be considered as an adequate representation of the overall US stock market when compared with other indices such as the S&P 500 Index. This is because it includes only the top 30 companies and does not include market capitalization. It does not use the arithmetic mean as well.
How to read IDXDJX: DJI?
Step 1: understand the stocks that consist of the DJIA. As mentioned before, it includes thirty largest and best-known companies of the world. These companies provide non-transportation and non-utility goods and services. The editors maintain the lists so the process is subjective. Do your homework well.
Step 2: get the quote from DJIA. Several websites offer stock and index quotes both the real-time and delayed ones. However, it is important to remember that DJIA is only an index and not security. Therefore, the companies use different symbols to track the index in their systems.
Step 3: quotes show the price. It is the cumulative price of the last trades of each one of the 30 companies included in the index. The price will include several factors such as opening high and low price, the year-to-date, percentage change in the price, volume and the 52-week price range (high and low). One should know how to read these figures to understand the quote.
Step 4: compare the individual stocks included in the index. The companies that are part of the index are the largest ones in the market; however, it does not mean that they are immune to the market risks and bankruptcy.
Step 5: Do not ignore the other reputed indices such as S&P 500, Russell 2000 etc. Their data is going to be more comprehensive because they include more number of companies. Dow Jones offers both international and technology indices. One index cannot provide the complete picture so it is always a good idea to review other indices before taking a decision.
It is often thought that investing in the index by buying shares like NASDAQ: TSLA at https://www.webull.com/balance-sheet/nasdaq-tsla is a good option; however, the index can only track stocks, it cannot be a safe investment option.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.