Every weeknight on your local and national television news, the newscasters
talk about how the Dow Jones Industrial Average has gone up or down for
the day? They then flash you a set of numbers and you are supposed to
understand if your retirement funds have increased or decreased in value.
Randy asks a good question, because not many people understand the history of
the DOW or how it works, so here is my best shot in trying to explain it you.
The name DOW is short for the Dow Jones Industrial Average (DJIA).
In 1889, Three young reporters working in a basement office on Wall Street (New York) founded the DJIA. The three, Charles Dow, Edward Jones and Charles Bergstresser started a business newspaper to meet the needs of the traders of the New York Stock Exchange. Included in the paper was unique measure of the Stock Market, called the Dow Jones Industrial Average.
Today, the DJIA has become the measure or index of all the
U.S. Stock Markets and the major industries in the country. The DJIA is used
as indicator or benchmark that lets investors know which way the stock market
is going, either up Ý or down ß
. In simple terms, it shows if investors are making or losing money in the
stock markets
that day.
The DJIA is used as a reference by investors from all over the world who have an interest in the U.S. Markets.
The DJIA is comprised of 30 companies that represent different industrial sectors. As each company's stock trades through out the day, and the price of the stock makes the Dow Jones Industrial Average go up or down. The stock price changes (averaged) of all 30 stocks are then reported every 15 seconds of the trading day.
The DJIA is maintained and reviewed by the editors of The
Wall Street Journal. Changes in the index (30 companies) are rare and have
not happened since November 1, 1999 when Microsoft, Intel, Home Depot and SBC
Communications replaced ailing companies. For a corporation to be considered
for placement in the DJIA, they must have an excellent reputation, demonstrate
substantial growth, be of interest to a large number
of investors and accurately represent their business sector.
For specific information about the Dow Jones Industrial Average such as charts, historical data by year or more facts, just click on the link. http://www.djindexes.com/jsp/industrialAverages.jsp
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IV. The companies that make up the DOW.
| Symbol | Stock |
| AA | ALCOA INC |
| AIG | AMER INTL GROUP INC |
| AXP | AMER EXPRESS INC |
| BA | BOEING CO |
| C | CITIGROUP INC |
| CAT | CATERPILLAR INC |
| DD | DU PONT E I DE NEM |
| DIS | WALT DISNEY-DISNEY C |
| GE | GEN ELECTRIC CO |
| GM | GEN MOTORS |
| HD | HOME DEPOT INC |
| HON | HONEYWELL INTL INC |
| HPQ | HEWLETT PACKARD CO |
| IBM | INTL BUSINESS MACH |
| INTC | INTEL CP |
| JNJ | JOHNSON AND JOHNS DC |
| JPM | JP MORGAN CHASE CO |
| KO | COCA COLA CO THE |
| MCD | MCDONALDS CP |
| MMM | 3M COMPANY |
| MO | ALTRIA GROUP INC |
| MRK | MERCK CO INC |
| MSFT | MICROSOFT CP |
| PFE | PFIZER INC |
| PG | PROCTER GAMBLE CO |
| T | AT&T INC. |
| UTX | UNITED TECH |
| VZ | VERIZON COMMUN |
| WMT | WAL MART STORES |
| XOM | EXXON MOBIL CP |
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Lesson Plan for the Dow Jones Industrial Average
What is the Dow?
Time: 30 minutes.
Prep Time: 20 Minutes
Goal:
To teach children or student about the Dow Jones Industrial
Average; What it represents; and which companies are
represented.
Tools:
Skills:
Resources:
Directions for Teachers:
Step 1.
Visit www.yahoo.com (finance link)
of a chart of the Dow
Jones Industrial Average (30 stocks) and make enough copies for each student.
On the chart will include highs and lows for the day and for a 52 week time
period.
Step 2.
Bring in or borrow from the school library a copy of the current local newspaper. You will use this to show the children where to look for the current DOW Average.
Step 3.
Conduct an in class discussion about the Dow Jones Industrial Averages. Start the discussion by asking if they have heard this on TV? Other talking points can include: companies in the DOW, Where to go to find it in the local paper, what types of people watch the DOW (i.e. brokers, money mangers bankers) and what are people’s reactions when the DOW goes down?
Step 4.
Name______________________
Date_______________________
Dow Jones Industrial Average
In Class Exercise
Research and Answer the questions below:
_____________________, _____________________,
___________________
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Enjoy the rest of your week.
Timothy Liptrap
VP, Education and Development
101 Financial Lessons
Copyright 2006
