Hold your stocks
Don't be an idiot
Your own psychology will work against you otherwise
Hold your stocks
Don't be an idiot
Your own psychology will work against you otherwise
It's a bad day so far. Deep plunge.
just as an educational aside - today is a classic example of why the Dow is a poorly constructed index. The Dow is down 0.74%, while the Sp 500 is down just 0.31% and the total stock market is down just 0.23%.
The problem with the Dow is that it is price weighted - higher priced stocks count more than lower priced stocks. So if a company splits its shares, it becomes half as large a Dow component. Even though its market cap remains the same. Makes no sense economically - this system was derived before computers - they needed an easy way to compute the Dow with pencil and paper.
So today:
9 stocks make up 50% of the Dow - and with just two stocks down big - GS and IBM, the index is severely underperfoming the market.
the smallest 9 stocks in the dow make up just 13% of the dow. Cisco is less than a percent b/c its share price is just $22. Visa is 8% of the index b/c its price is $200. But their market caps are virtually identical.
Over long periods of time the differences mostly go away, but there can be large discrepancies over shorter terms.
Reading is FUNdamental wrote:
Tullamore Do wrote:I honestly don't know if you are just being blatantly dishonest or if you are as dumb as you appear to be.
It is you, sir, who is being dishonest by introducing words into your defense that were not part of the post to which you replied. You may think I'm dumb, but I'm obviously bright enough to see through your charade. That makes me smarter than you.
Too nuanced I guess
[quote]agip wrote:
just as an educational aside - today is a classic example of why the Dow is a poorly constructed index. The Dow is down 0.74%, while the Sp 500 is down just 0.31% and the total stock market is down just 0.23%.
Sometimes the Dow does better than the other two indices, sometimes worse. Does not make it a "poorly constructed index".
What does make it a worse indicator than other indices is the meager number of stocks it is based upon.
Stop picking on me.
I am an Ivy league grad. And am super rich. And perfect.
I refutate everything you say
Tullamore Do wrote:
[quote]agip wrote:
just as an educational aside - today is a classic example of why the Dow is a poorly constructed index. The Dow is down 0.74%, while the Sp 500 is down just 0.31% and the total stock market is down just 0.23%.
Sometimes the Dow does better than the other two indices, sometimes worse. Does not make it a "poorly constructed index".
What does make it a worse indicator than other indices is the meager number of stocks it is based upon.
__
no, it is poorly constructed. why should Visa have 8x the weight of cisco when their market caps are about the same?
At one point during the crisis, the entire financial compenent of the dow could disappear and the dow wouldve gone down something like 100 points. All the bank stocks were in single digits and something like 0.5% of the index.
Tullamore Do wrote:
Sometimes the Dow does better than the other two indices, sometimes worse. Does not make it a "poorly constructed index".
What does make it a worse indicator than other indices is the meager number of stocks it is based upon.
So it's not a "poorly constructed index", but it's the worst indicator because of how it's constructed? WTF?
Rut-roh shaggy wrote:
It's a bad day so far. Deep plunge.
It's turned around. Let's see how far up it goes.
Aglp wrote:
Stop picking on me.
I am an Ivy league grad. And am super rich. And perfect.
I refutate everything you say
Extremely, even excruciatingly lame.
Unless You Own Goldman or IBM, Ignore the Dow Today
By Brendan Conway
Warning! This blog post contains stock-index nerddom!
With that out of the way, here it is: Feel free to ignore the Dow Jones Industrial Average on Thursday.
Reuters
Their fault
The blue-chip index’s 82-point loss this morning is more than twice what the S&P 500 and Nasdaq are losing on a percentage basis. It’s an artifact of the index’s old-timey methods. The Dow weights its stocks by their price. The higher the stock’s price — as opposed to, say, its total market value — the bigger the weighting in the Dow.
Judging a stock by its price versus another stock’s is a rather arbitrary way to go about measuring the market. It’s the reason the Dow’s move today is so different from the other indexes.
Goldman Sachs (GS) and International Business Machines (IBM) are two of the three top-priced stocks in the Dow at $158 and $174. They’re slumping 2.3% and 6.5%, respectively, on disappointing quarterly reports.
But more than half of the Dow’s thirty stocks are on the rise today. American Express (AXP) is up more than 4% after its own earnings report, which was better than anticipated. If you were to market-weight the Dow, you’d get something closer to what the other indexes are doing.
So, again, feel free to ignore the blue-chip index.
{B]Tullamore Do wrote:
Sometimes the Dow does better than the other two indices, sometimes worse. Does not make it a "poorly constructed index".
What does make it a worse indicator than other indices is the meager number of stocks it is based upon.[/quote]
So it's not a "poorly constructed index", but it's the worst indicator because of how it's constructed? WTF?[/quote]
agip stated: "just as an educational aside - today is a classic example of why the Dow is a poorly constructed index. The Dow is down 0.74%, while the Sp 500 is down just 0.31% and the total stock market is down just 0.23%.
As an aside, not how he is educating us all.
Anyway, he is stating the Dow is a lousy indicator because it is well down while the other two indices he cites are not.
It is a poor indices but not for this reason.
You really need some sharpening up, son. If you are going to continue to launch attacks you ought to know a little bit more about the topic at hand
It wasn't an attack. I asked a question.And if you read the thread you would know why agip believes the Dow is a poor indicator. The fact that the Dow was down more was an example of what happens to an index that is heavily weighted with financials like Visa. Now you have been educated. You're welcome.
Tullamore Do wrote:
agip stated: "just as an educational aside - today is a classic example of why the Dow is a poorly constructed index. The Dow is down 0.74%, while the Sp 500 is down just 0.31% and the total stock market is down just 0.23%.
As an aside, not how he is educating us all.
Anyway, he is stating the Dow is a lousy indicator because it is well down while the other two indices he cites are not.
It is a poor indices but not for this reason.
You really need some sharpening up, son. If you are going to continue to launch attacks you ought to know a little bit more about the topic at hand
Two of the three major indices are now in positive territory and the Dow is trending that way.
Huh?? wrote:
It wasn't an attack. I asked a question.
And if you read the thread you would know why agip believes the Dow is a poor indicator. The fact that the Dow was down more was an example of what happens to an index that is heavily weighted with financials like Visa.
Now you have been educated. You're welcome.
No. Your welcome.
Your welcome.
who wants post #1000 honors?
for symmetry's sake it should be the OP
Klondike5 wrote:
What's the bottom?
I am betting sub 13,000
spade detector wrote:
*golf clap*
K5 wrote:
Keep your pants on, smart guy. This thing isn't over yet. I can feel it.
Come on, Come on. Feel it, feel it. Feel the vibrations.
more all time highs today for US small caps and mid caps - I am loving this market.
It's a stealth market - relatively few believe in it, but up up up it goes.
But like I have said, US stocks are too expensive - we're relying on overshooting valuation norms now (or a huge earnings burst)
S&P reaches an all time high.
This is the type of market that happens when Dems are in power.