Waldo Jaquith

The Dow Jones Industrial Average was established in 1896 with just 30 companies because it it was a lot of work to average 30 numbers back then. Charles Dow probably would have averaged a far larger number if calculators had existed. Today the Dow Jones Industrial Average is *still* an average of just 30 companies’ share values, because ✨tradition✨, despite the existence of computers.

This is why I ignore the Dow Jones Industrial Average.

Apr 26, 2023 at 3:15pmIvory for Mac
Show threadChad GeidelApr 26, 2023

@waldoj There are so many questions I would love to ask a "chatbot" to answer.

For example - off the top of my head I would ask "How many companies today would meet Dow's original metric for inclusion (inflation adjusted)?"

That would be some real Star Trek tech.

Show threadWaldo JaquithApr 26, 2023
@chadgeidel Virtually none! The DJIA was meant for industry—smelting iron, forging steel, building railroads, that kind of thing.
Show threadJesse SkinnerApr 26, 2023
@waldoj the dow is 30 companies?! Why hasn't the S&P 500 totally displaced it?
Show threadWaldo JaquithApr 26, 2023
@JesseSkinner ✨Tradition ✨
Show threadBrian GawaltApr 26, 2023
@waldoj @JesseSkinner [80% confidence] Also they pick the 30 companies so that their index value tracks the same answer you'd get from the 3,000-wide average. It's weird! They're calculating the good value so they can replace it with a worse value!