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Why Dow Jones Index Does Not Matter?

Dow Jones Index was created in 1896 as an indicator of how well the US economy was growing when 30 of its large publicly held companies did well during a standard trading session. Even today, the DJIA represents an average of the stocks of top 30 companies that are majorly considered to have an impact on the growth or decline of the US economy. Just 30 out of the 4333 (as on June 2016) publicly traded companies and the number has come down from more than 8000 since 1996 due to various factors including the higher underwriting and registration costs, market volatility etc. Apart from representing the 30 huge companies, higher DJIA index value does not represent growing personal income, GDP, lower unemployment rates or any economic indicator that reflects true growth. More often, the DJIA ha...

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