You have probably heard of Dow Jones before, but did you know ‘he” has more followers than Kylie and Kendall, combined! Although he may not be plumping his lips or showing off his behind, he is an influencer, and an important one in the stock market.
Side Note: Large Cap is a stock that has value over $ 5 Billion, such as IBM.
Dow Jones, consists of the Top 30 large cap stocks that are on the Nasdaq and NYSE, and are picked by editors at the Wall Street Journal. Since it is hand selected and represents the top 30 stocks, the Dow tends to have a wide influence on the perceptions of the stock market, just like your favorite Instagram stars.
Think of the Dow Jones, as an Instagram influencer that you follow; they have millions of followers and influence you and others on what products to buy and actually influence others on what to start promoting and act like as well. Remember Fit Tea? It started with a few influencers and then spread down to the masses. Now the more followers they have the more valuable they are considered, and they set the tone for the rest of the Instagramers. Just like the way the Dow Jones sets the perceived value for the market.
So when the Dow is up, everyone is jumping for joy, and when it is down, everyone is running around like a chicken with his or her head cut off. Remember the election when the Dow Futures were down over 700 points, the media was sent into frenzy! And now it is over 19,000! (A new record high)
How is it calculated?
The Dow Jones is calculated on price-weighted average, and is found by dividing the 30 stocks by the Dow Divisor.
• Dow Divisor: is a formula that takes into consideration stock splits and other events that influence the price of stock
• The Dow Jones divisor currently stands at below 1, which means it acts as a multiplier currently.
So don’t be shy start following the Dow, and understand the perceived value of the market!