How The 100-Year DOW Stock Market Chart Makes it Easy to See What’s Really Happening in the Markets
People are often afraid of investing because of unpredictability of the Stock Market. This was a fair point until the beginning of the 1900s. But today when we have numerical values to base our research on, we can make reliable investments by predicting future market trends.
Dow Jones Industrial Average, popularly known as “The Dow”, was devised by H. Dow, a financial journalist, and Edward Jones on May 26, 1896. Since then, there has been a lot of changes in terms of its contributing components and the calculating techniques; yet it is now the most popularly referenced Stock Market Index.
Before proceeding to the next section of how a 100-Year Stock Market Dow Chart can help you, let’s have a brief look on The DOW: Then and Now.
The Dow: Then and Now
In 1896, at its beginning, The Dow has 12 constituent elements and was calculated merely as an average of stock prices of these elements. The constituent element of The Dow keeps altering depending on the leaders of stock market. The Dow currently has 30 elements.
The Dow is now a price-weighted index and not just an average stock price. This means the higher the stock price, the greater will be its contribution to the final value. This ensures fair calculation and accurate display of market trend.
How can the 100-year old Dow Chart help you in defining market predictability?
History repeats itself. Now, this may not be true for every sector but it sure is an established fact as far as the stock market is concerned. The Great Economic Depression of 1929 was also reflected by The Dow, prior to its occurrence. Now that The Dow is more than 120 years old, its predictability is more reliable than ever.
The 100-year Dow Chart can be used to understand the past and use this knowledge to help understand what kind of market cycle we are in today, but looking at both price and earnings trends over time. Observing the trends from the 100-Year Stock Market Dow Chart can help you in defining the strengths and weakness of a company. Based on the verdict of history, most of the stocks follow the general market trend and that can be accurately predicted by The Dow. The 100-year Stock Market Dow Chart can be used to conduct a detailed market analysis to spot the resistibility and understand the persistence of a company.
Again, it should never be forgotten that Stock Market can take totally unpredictable turns and The 100-year Stock Market Dow Chart is just a way to make an informed investment. But, at the same time, The Dow has earned a reputation of predicting the course of stock market over the years and is the most quoted index, in spite of the fact that, it considers just 30 companies to calculate its final value.
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