Dow Jones Industrial Average Born

Today in 1896, Charles Dow published the first edition of the Dow Jones Industrial Average. The DJIA Web site: “It seems simplistic nowadays with the array of market indicators in the public eye, but late in the nineteenth century it was like turning on a powerful new beacon that cut through the fog. The average provided a convenient benchmark for comparing individual stocks to the course of the market, for comparing the market with other indicators of economic conditions, or simply for conversation at the corner of Wall and Broad Streets about the market’s direction.

The mechanics of the first stock average were dictated by the necessity of computing it with paper and pencil: Add up the prices and divide by the number of stocks. This application of grade-school arithmetic, while creative, is hardly useful more than a century later. But the very idea of using an index to differentiate the stock market’s long-term trends from short-term fluctuations deserves a salute. Without the means for the ordinary investor to follow the broad market, today’s age of financial democracy (in which millions of employees are actively directing the investment of their own future pension money and as a result are substantial corporate shareholders) would be unimaginable….

At first, the average was published irregularly, but this changed with the daily publication in The Wall Street Journal, which began on Oct. 7, 1896.”

The index hit its all-time low of 28.48 in the summer of 1896 during the depths of what later became known as the Panic of 1896. Of the original 12 stocks forming the Dow Jones Industrial Average, only General Electric is currently part of the index.

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About GilPress

I launched the Big Data conversation; writing, research, marketing services; http://whatsthebigdata.com/ & https://infostory.com/
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