Do You Remember the Dow's 373-, 274-, 238-, and 234-Point "Plunges" This Year?

Do You Remember the Dow's 373-, 274-, 238-, and 234-Point "Plunges" This Year?

The Dow Jones Industrial Average (DJINDICES: ^DJI), which is composed of 30 U.S. multinational giants from a variety of industries, is full of flaws. To begin with, the index is price-weighted instead of being weighted by market cap, like the broad-based S&P 500 (SNPINDEX: ^GSPC). That means companies like Goldman Sachs have more weight than Apple because of the former's higher share price, which makes little sense. There's also the issue of not all sectors being included in the Dow, with real estate and utilities receiving no representation. 

Nevertheless, the 121-year-old Dow Jones Industrial Average remains an iconic index that Wall Street and investors follow closely. Generally speaking, as goes the Dow, so goes investor sentiment.

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Source: Fool.com