What is the Dow Jones?
By Nicholas Swezey

The "Dow" refers to the Dow Jones Industrial Average, which is a scaled average of thirty of America's top stocks. The second oldest American stock index, it is often listed with the S&P 500 index in financial summaries.

The main purpose of the Dow is to give an idea of how the overall American stock market is doing. However, with only thirty companies in the average it may not be a perfect representation of the market. Even so, it has been an important and popular index for over one hundred years.

Example
If the Dow has gone up 150 points, that means it has gone up to 10,150.00 if yesterday's closing value was 10,000.00. That represents a gain of 1.5 percent.

Included Companies
Some companies that have been in the Dow the longest include GE (1907), ExxonMobil (1928 as Standard Oil), 3M (1976), IBM (1979), and McDonald's (1985). Some of the other popular companies include Boeing, Coca-Cola, Walt Disney, Wal-Mart, The Home Depot, and Microsoft.

Investing in the Dow
While you can't directly trade the Dow since it is just an average, you can take advantage of it in other ways, including buying some of the companies included in the index or by trading ETFs and mutual funds based on the Dow.

History
The Dow was first published in 1896 at a level of 40.94 with only twelve companies and hit an all-time low of 28.48 later that year. The all-time high of 14,164.53 occurred at the end of October 9, 2007.

The Company
Dow Jones & Company, the company behind the Dow Jones Indexes, is a News Corporation company, which also publishes The Wall Street Journal, Barron's, MarketWatch, and many other things. Dow Jones Indexes provides over 130,000 different equity indexes.

Nicholas Swezey is the creator of the free stock market game on his site, http://www.HowTheMarketWorks.com

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