Compare the Dow Jones performance to other indexes
Investors who own stock mainly in the Dow Jones Industrial Average companies are at risk of missing opportunities in other indexes and markets. While the Dow Jones Index is the most recognized stock market“>stock index, it’s performance so far in 2005 trails that of other sizable indexes.
While the Dow is down just slightly for 2005 the S&P500 index is performing three percentage points better. It is important to note that the S&P 500 tracks the performance of large stocks, including all of the 30 issues that make up the Dow Jones Index. The S&P provides the additional benefit of also holding 470 more companies, so as to offer greater diversity. Recent changes to the Dow Jones Index, including the replacement of long-time stalwarts such Chevron Corp., Goodyear Tire & Rubber Co., Union Carbide Corp. and Sears, Roebuck with Home Depot, Intel Corp., Microsoft Corp. and SBC Communications Inc. may be part of the reason for the weaker performance. Five of the seven most recent companies to join the Dow are down in price so far in 2005.
While the Dow may be the most recognized index, investors have over 9,000 indexes to choose from including bond and foreign stocks. While you may see some differences between indexes in the short term, the Dow Jones Index, S&P 500, Nasdaq composite and Russell 2000 have all performed within an annual range of less than one-half a percentage point between each other of the last ten years.