The Dow Jones, Explained

Sep 2020

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In today’s episode, Rick Bloom is joined by Bloom Asset Management team member Jack Riashi, Jr, to answer listener questions about the Dow Jones Indusrial Average, or DJIA.

We start with the misnomer that is “industrial average.”  The Dow may have started that way, but Jack explains why it’s not really “industrial” anymore.  Also, the index is an average of only thirty industry leading companies.

Next, Jack and Rick explain how the Dow Jones Industrial Average is calculated, and how that compares to other indexes.  They also cover how – and why – the Dow changes.  What does that mean for companies that are added or removed?

In fact, three companies were recently removed from The Dow – Exxon, Raytheon, and Pfizer. They were replaced by Amgen, Salesforce, and Honeywell. Jack and Rick talk about what that means.

In terms of practical use, Jack explains how everyday investors should use The Dow.  We cover the dangers of basing a porfolio around one index, and we discuss why percentage is more important than points.

As always, Rick answers listener questions from you. This time, he starts with an email regarding bank accounts’ FDIC insurance and interest rates.

Rick also answers listener emails regarding withdrawing retirement funds and Coronavirus-related exceptions in 2020, as well as fees advisors charge.



As always, if you have a question for Rick, you can email him at:

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