The Dow Really Isn’t As Important as the Media Makes It Seem

The media has been constantly keeping track of the Dow Jones Industrial Average (or The Dow as it’s most often called) and making it seem more important than it actually is.  Honestly, how many people even understand what the Dow Jones is?

It’s a stock index – an average (although it’s calculations are a little more complicated than just adding them up and dividing by how many stocks there are).  There are 30 companies in The Dow, and they are 30 companies that are considered to be the largest and most widely held public companies in the U.S.  The average is calculated by adding up the prices of the 30 stocks and then divided by a divisor (this keeps the average from being affected by stock splits, etc…).

So, when you think about it, The Dow could fall 1,000 points, but every other company could see their stock prices go up (now, this is unlikely, and the Dow Jones generally follows the trends of the overall market, but it’s important to note that people are overreacting to the Dow Jones falling).  America and the media are all in a panic because 30 companies’ stock prices went down.  Now, I’m not saying that The Dow is completely unimportant, but I think that we’re reacting way too much to what’s happened to The Dow – and the media HAS NOT helped at all.  They’re playing this up like if The Dow keeps falling, the entire market will fail (and it very well might, but it shouldn’t be just because people panic after seeing the Dow Jones fall).

If you own stock, just monitor that, and make decisions based on what THAT stock is doing.  Don’t worry about The Dow if your stock is doing fine.  The media needs to do a much better job of explaining these things instead of doing what they’re doing now and sending everybody into a panic.

Done Ranting,

Ranting Republican
add to del.icio.us :: Add to Blinkslist :: add to furl :: add to ma.gnolia :: Stumble It! ::

Tags: , , , , , , , , , ,

3 Responses to “The Dow Really Isn’t As Important as the Media Makes It Seem”

  1. john wallis Says:

    I totally agree, I’ve been saying this for years. A long time ago I worked on Wall St in the IPO sector and this is just about the first thing I learned. This and the 2 golden rules; Don’t school the fool and pigs get slaughtered. There seems to be a lot of slaughter going on right now but the fool is still unschooled.

  2. The Dow is Back in Positive Territory « Republican Ranting Says:

    […] Dow is Back in Positive Territory The Dow Jones is up 55.19 points.  I said yesterday that the Dow really doesn’t matter in terms of other stocks, but it DOES matter in terms of […]

  3. Obama’s Proposed Capital Gains Tax Increase Would Kill the Economy « Republican Ranting Says:

    […] say, you need to understand one principle about American economics: When the stock market suffers (or even only the Dow Jones for that matter), people panic, and the economy nose dives.  This is all a bi-product of people paying too much […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: