There was a lot of hoo-ha about the Dow Jones index’s jump above the 22,000 mark. Yet the Dow “is a meaningless index”, as the FT’s John Authers points out. It is weighted by share price rather than market capitalisation, leading to “absurd distortions”.
If a firm’s stock costs twice as much as that of a rival, it will occupy twice as much of the Dow, even if it has a smaller market value. Goldman Sachs, which costs over $230, accounts for most of the index’s recent increase, even though Apple, which costs considerably less per share, is the bigger and more important company.
Viewpoint
“On both sides of the Atlantic there is almost no high-quality journalism from the moderate right-wing press available free and ungated online. The Times, The Telegraph, The Spectator, the FT, The Wall Street Journal and The Economist all sit behind paywalls. The Guardian, The New Statesman, The Independent, The Huffington Post and BBC Online are all free; as are the more outlandish right-wing publications: Breitbart, Mail Online and Fox News, for instance. If you are a moderate Burkean conservative baffled as to why the internet seems full of left-wing ideologues interspersed with the odd tin-foil-hatted right-winger, this explains a lot.”
Rory Sutherland, The Spectator