THE DOW JONES INDUSTRIAL AVERAGE

 

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The Dow Jones Industrial Average (NYSE: DJI) is one of several stock market indices created by Wall Street Journal editor and Dow Jones & Company founder Charles Dow. Dow compiled the index as a way to gauge the performance of the industrial component of America's stock markets. It is the oldest continuing U.S. market index.

 

Today, the average consists of 30 of the largest and most widely held public companies in the United States. The "industrial" portion of the name is largely historicalómany of the 30 modern components have little to do with heavy industry. To compensate for the effects of stock splits and other adjustments, it is currently a weighted average, not the actual average of the prices of its component stocks.

 

 

History

 

First published on May 26, 1896, the DJIA represented the average of twelve stocks from various important American industries. Of those original twelve, only General Electric remains part of the average. The other eleven were:

 

  • American Cotton Oil Company, a predecessor of Bestfoods, now part of Unilever

  • American Sugar Company, now Amstar Holdings

  • American Tobacco Company, broken up in 1911

  • Chicago Gas Company, bought by Peoples Gas Light & Coke Co. in 1897 (now Peoples Energy Corporation)

  • Distilling & Cattle Feeding Company, now Millennium Chemicals

  • Laclede Gas Light Company, still in operation as The Laclede Group

  • National Lead Company, now NL Industries

  • North American Company, broken up in the 1950s

  • Tennessee Coal, Iron and Railroad Company, bought by U.S. Steel in 1907

  • U.S. Leather Company, dissolved 1952

  • United States Rubber Company, changed its name to Uniroyal in 1967, bought by Michelin in 1990

 

When it was first published, the index stood at 40.94. It was computed as a direct average, by first adding up stock prices of its components and dividing by the number of stocks. In 1916, the number of stocks in the DJIA was increased to twenty, and finally to thirty in 1928. On November 14, 1972 the average closed above 1,000 (1,003.16) for the first time.

 

The 1980s and especially the 1990s saw a very rapid increase in the average. On November 21, 1995 it closed above 5,000 (5,023.55) for the first time and on March 29, 1999 the average closed at 10,006.78 which was the first time the index closed above the 10,000 mark. Just over a month later on May 3, 1999, it closed at 11,014.70, its first close above 11,000. The average closed at an all-time peak of 11,722.98 on January 14, 2000. By mid-2002 however, it had returned to its 1998 level of 8000. On October 9, 2002, the DJIA bottomed out at 7286.27 (intra-day low 7197.49), its lowest close since October 1997. By the end of 2003, however, the Dow returned to the 10,000 level. On January 9, 2006 the average broke the 11,000 barrier for the first time since June 2001, closing at 11,011.90. 

 

The largest one-day percentage drop in the history of Dow Jones was on December 12, 1914, 24.39%. The largest one-day percentage drop in the last 50 years occurred on "Black Monday" in 1987 when the average fell 22.6%. The largest one-day point drop occurred on September 17, 2001, the first day of trading after the September 11, 2001 attacks, when the Dow fell 684.81 points or 7.1%. By the end of the week of September 17th, the Dow had fallen 1369.70 points, or 14.3%.

 

 

Criticism

 

Some people criticize the DJIA because it is a price-weighted average, which gives relatively higher-priced stocks more influence over the average than their lower-priced counterparts. This can produce misleading results, as a $1 increase in a lower-priced stock can be negated by a $1 decrease in a much higher-priced stock, even though the first stock experienced a larger percentage change. Additionally, the inclusion of only 30 stocks in the average has brought on additional criticism of the average, as the DJIA is widely used as an indicator of overall market performance.

 

Many critics of the DJIA recommend the S&P 500 index or the NASDAQ as better indicators of the wider economy.

 

Another issue with the Dow is that not all 30 components open at the same time in the morning. Only a few components open at the start and the posted opening price of the Dow is determined by the price of those few components that open first and the previous day's closing price of the remaining components that haven't opened yet; therefore, the posted opening price on the Dow will always be close to the previous day's closing price (which can be observed by looking at Dow price history) and will never accurately reflect the true opening prices of all its components. Furthermore, in terms of candlestick charting theory, the Dow's posted opening price cannot be used in determining the condition of the market.

 

 

Components

 

The individual components of the DJIA are occasionally changed as market conditions warrant. They are selected by the editors of The Wall Street Journal. When companies are replaced, the individual weightings are adjusted so that the value of the average is not directly affected by the change.

 

On November 1, 1999, Chevron, Goodyear Tire and Rubber Company, Sears Roebuck, and Union Carbide were removed from the DJIA and replaced by Intel, Microsoft, Home Depot, and SBC Communications. Intel and Microsoft became the first two companies traded on the NASDAQ exchange to be listed in the DJIA. On April 8, 2004, another change occurred as International Paper, AT&T, and Eastman Kodak were replaced with Pfizer, Verizon, and AIG. December 1, 2005 AT&T's original T symbol returned to the DJIA as a result of the SBC Communications and AT&T merger.

 

The Dow Jones Industrial Average consists of the following 30 companies:

 

  • 3M Co. (NYSE: MMM) (conglomerates, "manufacturing")

  • ALCOA Inc. (NYSE: AA) (aluminum)

  • Altria Group, Inc. (NYSE: MO) (tobacco, foods)

  • American International Group, Inc. (NYSE: AIG) (property & casualty insurance)

  • American Express Co. (NYSE: AXP) (credit services)

  • AT&T Inc. (NYSE: T) (telecoms)

  • Boeing Co., The (NYSE: BA) (aerospace/defense)

  • Caterpillar, Inc. (NYSE: CAT) (farm & construction equipment)

  • Citigroup, Inc. (NYSE: C) (money center banks)

  • Coca-Cola Co. (NYSE: KO) (beverages)

  • E.I. du Pont de Nemours & Co. (NYSE: DD) (chemicals)

  • Exxon Mobil Corp. (NYSE: XOM) (major integrated oil & gas)

  • General Electric Co. (NYSE: GE) (conglomerates, media)

  • General Motors Corporation (NYSE: GM) (auto manufacturers)

  • Hewlett-Packard Co. (NYSE: HPQ) (diversified computer systems)

  • Home Depot, Inc. (NYSE: HD) (home improvement stores)

  • Honeywell International, Inc. (NYSE: HON) (conglomerates)

  • Intel Corp. (NYSE: INTC) (semiconductors)

  • International Business Machines Corp. (NYSE: IBM) (diversified computer systems)

  • JPMorgan Chase and Co. (NYSE: JPM) (money center banks)

  • Johnson & Johnson Inc. (NYSE: JNJ) (consumer and health care products conglomerate)

  • McDonald's Corp. (NYSE: MCD) (restaurant franchise)

  • Merck & Co., Inc. (NYSE: MRK) (drug manufacturers)

  • Microsoft Corp. (NYSE: MSFT) (software)

  • Pfizer, Inc. (NYSE: PFE) (drug manufacturers)

  • Procter & Gamble Co. (NYSE: PG) (consumer goods)

  • United Technologies Corp. (NYSE: UTX) (conglomerates)

  • Verizon Communications (NYSE: VZ) (telecoms)

  • Wal-Mart Stores, Inc. (NYSE: WMT) (discount, variety stores)

  • Walt Disney Co., The (NYSE: DIS) (entertainment)

 

Weightings

 

The exact weightings for each component are published daily [1] by Dow Jones.

 

 

Investing

 

Apart from investing in the individual stocks in the Dow Jones, there also is the option to invest in an exchange-traded fund (ETF) which represents ownership in a portfolio of the equity securities that comprise the DJIA. This ETF is called the Diamonds, and the ticker symbol is AMEX:DIA. The units of this ETF, therefore, represent an opportunity for the investor to achieve the same performance of the DJIA and trade like any other stock on the Amex Exchange, so they can be bought on margin, sold short or held for the long term.

 

 

External links

 

Performance

 

 

 

 

 

New York Stock Exchange (June 2003)

 

 

 

 


 

 

 

SOLAR COLA as an INVESTMENT OPPORTUNITY?

 

The soft drinks market is a tough place to do business, unless you have something different to offer and the marketing muscle to match. 

 

For nearly 100 years Coca Cola and Pepsi Cola have dominated the marketplace with similar products.  Each company spends around $600-800 million dollars a year on advertising to maintain its market position. The advertising centers around sport and music, with a scattering of irregular television campaigns. Each company launches (or attempts to launch) new brands every year.  So far, they have not proved as successful as their regular cola brands.

 

Red Bull, although in a different drinks category, spends not quite as much on advertising, but has managed to acquire instant status and volume sales from sponsoring formula one, the Darpa Desert Challenge, and now the New Jersey MetroStars football team.

 

Solar Cola, apart from it's contemporary name, is a healthier cola based drink.  Just as refreshing, it contains a unique blend of added ingredients as an aid to good health and energy levels.  The company contributes to and sponsors alternative projects, to include this website, featuring movies, music and several thousand pages of general information, which generates in excess of 3 million visits a month already.  Recent acquisitions include the rights to the Solar Navigator World Electric Challenge, and also the new Bluebird Electric land speed record car for 2007.  The company may also sponsor the London to Brighton Solar Car Run in 2008 (dependent on the number of university entries received). 

 

It is thought that this marketing strategy will equal several hundred thousand dollars of conventional Ad Agency spending.  As an example of the kind of media coverage such nautical antics generate, you have only to look at the newspapers when Ellen Macarthur completed her world circumnavigation - front page on every national paper.  The same holds true for Sir Francis Chichester and Sir Robin Knox-Johnston in their hey day.

 

The design of the Solar Cola can is copyright protected, with trademark applications in the USA, Australia and Europe pending in Class 32 and granted rights in the UK.  Introduction of the drink is held in abeyance pending official launch of one or other sponsored projects, which will be activated when the time is right, such activation to coincide with the market introduction of the drink.

 

Solar Cola PLC is shortly to be activated for online investment as their trading arm.  The company is forecast to produce excellent results for investors, with sustained growth to be followed by an eventual flotation on the Stock Markets of the world in the next few years.  At this point estimates suggest investors will reap substantial gains - in line with international Licensing expectations.

 

Solar Cola Ltd is managing the funding requirement for the trading company.  They are looking for medium term or seed investment between £4-5 million to kick start phase two of the venture.

 

If you are a Business Angel, or Equity House, looking for an opportunity with the potential for good returns, please contact SOLAR COLA LTD for details.  Please ask for the funding project manager: Nelson Kruschandl

 

 

+ 44 (0) 1323 831727

+44 (0) 7905 147709

 

 

Or email us:  cola @ solarnavigator.net       (spaces are an anti-spam measure)

 

 

 
This material and any views expressed herein are provided for information purposes only and should not be construed in any way as an endorsement or inducement to invest in any specific program. Before investing in any program, you must obtain, read and examine thoroughly its disclosure document or offering memorandum.

 

 

 

MONEY FINDER

 

 

 

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WOOLWICH

 

 

 

 

 


 

 

A taste for adventure capitalists

 

 

Solar Cola - a healthier alternative

 

 

This website is Copyright © 1999 & 2006  NJK.   The bird logo and name Solar Navigator are trademarks. All rights reserved.  All other trademarks are hereby acknowledged.       Max Energy Limited is an educational charity.

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