The Dow Jones, symbol of the American stock market, abandoned by managers

Posted on Nov 26, 2020 at 7:04 am

Its ups and downs fuel the chronicle. Each new step taken by the Dow Jones is celebrated on Wall Street and in the press. But the oldest stock index has long lost its influence on the financial world. Not very representative of the American market, too concentrated, based on an archaic methodology… the Dow Jones Industrial Average accumulates criticism from investment professionals.

It is thus one of the only stock market indices to weight securities according to their price, and not to the capitalization of the companies. With sometimes surprising results. Like Apple, the largest company in the index with a valuation of nearly 2,000 billion dollars, which weighs half as much as Goldman Sachs, valued at only 85 billion. A consequence of the division by four of Apple shares this year, which also led to the exclusion of Exxon and Pfizer from the index. Previously, the apple brand represented more than 11% of the Dow Jones.

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