zzzzzzzz, would be more interesting to see what the dow is at if it used the components that were in it in 2000. Additionally, I think such comparisons should take into account inflation since component stocks are priced in dollars.
it is good bread-and-circus headline material though.
The idea that the DJIA level is only legitimate if the same companies are used is foolish. The individual companies are weighted and they have constantly been changed to reflect industry.
When the average was first introduced it had a number of railroads, Western Union and even leather companies. Would you really want to use those companies today? Do you really think that getting rid of Sears and adding Walmart was a bad idea? Should Studebaker still be on the list?
http://www.quasimodos.com/info/dowhistory.html
If you do it that way, then you also have to add every dividend paid out by these stocks to the cumulative total.
There's a reason why the DJIA is reaching record highs while other indexes are still off their all-time highs, folks. The 30 stocks in the Dow index tend to be older companies whose performance is an accurate indicator of the nation's industrial strength as a whole. These companies tend to pay the best dividends over time, and investors are willing to pay a premium for these stocks (especially in the aftermath of the tax cuts on dividends implemented in 2002-03). The dot-com bust of 2000 and the outright fraud involving companies like Enron, Global Crossing, etc. taught a valuable lesson to us all. Even if you have no faith in a company's financial statements and suspect that an earnings report is complete bullsh!t . . . it's impossible for a company like Enron to falsify their dividend payments.
--Additionally, I think such comparisons should take into account inflation since component stocks are priced in dollars--
True. The same goes for oil and gasoline prices.