Saturday, February 28, 2009

The Dow Doesn't Show Diddly Squat

There may have been a time when the Dow Jones Industrial Average actually reflected the real world, but it has long outlived its usefulness as a barometer of anything other than the fact that the financial world has gone cuckoo.
Example: On Monday the Dow dropped nearly 300 points because of bad financial news. On Tuesday, the Dow jumped nearly 200 points although the financial news was even worse.

So if we chuck the Dow, what do we substitute it with? Some ideas here.

1 comment:

kj said...

The Dow can be a useful indicator primarily when it's used in combination with other economic indicators, over time, to gain a reasonable sense of the market. The Dow by itself, especially in the short-term, does not tell you much. There are still individual equity opportunities that, even in this economy, are attractive. McDonalds Corp. is a good example, with significant growth taking place as a result of international expansion.