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Dow vs. S&P
Old 10-15-2009, 11:07 PM   #1
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Dow vs. S&P

Most people like to talk about the Dow, but I think the S&P is much more relevant to most people...or at least it should be. Most mutual funds are invested in way more than the 30 companies in the Dow.

As a matter of fact, you could make a good argument that the Willshire 5000 is more relevant.

I suppose it depends on how you invest (large cap or small cap or tech stocks, etc)...but in general I'm wondering which index you focus on...for me it's the S&P.

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Old 10-15-2009, 11:13 PM   #2
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To the extent that I even care on a daily basis, I look at the S&P... and then it is the percentage number that I consider important.
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Old 10-15-2009, 11:54 PM   #3
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S&P500 is the most accessible alternative. I try to ignore the Dow.
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Old 10-16-2009, 03:32 AM   #4
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I follow the TSX.
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Old 10-16-2009, 05:23 AM   #5
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The Dow is garbage. Not only are its constituents too few to be representative, the share-price weighting methodology is juvenile. You'd think it was invented by a couple of innumerate journalists. Oh wait...


S&P is the meaningful broad index in the US.
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Old 10-16-2009, 07:16 AM   #6
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The S&P is more meaningful but the DOW still catches my attention because of the media focus. I remember DOW 14,000 but not what the S&P was at the peak. I would have to look that up.
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Old 10-16-2009, 09:03 AM   #7
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I invest in the Total Stock Market index, but because the news follows the Dow and S&P I look at those too as indicators on how well overall the market is doing.
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Old 10-17-2009, 08:09 PM   #8
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Inherently, S&P500 is much more useful, and like you said Whilshire5000 even more. Due to media availability, I look at S&P500 only.

At this point, I think Dow might be interesting only if you want to trade and you think marker movers look at this index... For some reason people like Buffett and Cramer etc do mention DOW in the media - I never understood why... traditions die hard?
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Old 10-17-2009, 08:50 PM   #9
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DOW...S&P...NASDAQ...Russell and Wilshire series...Aggregate bond indices...here's a complete list that will boggle the mind.
Index Returns
Scroll down 1/3 of page to see "Other Domestic Stock Indexes" for the classics.

I like to look at the all encompassing market indices data, coupled with the broad bond market indices. The rest seem too narrow for a fully diversified portfolio. I understand some of them are historically narrow, coined before the market expanded to what it is today.

But, dammit Captain, I'm an engineer not a financial wizard! (Trekkers will recognize this ad lib on a famous outburst from "Bones" to Capt Kirk)
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Old 10-17-2009, 08:51 PM   #10
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I better find another index to use for myself.

I did some comparisons against the equity portion of my portfolio which is allocated over large, medium, small cap stocks, international stocks, and REITs.

From 1/15/09 when I rebalanced to 8/4/09 when I rebalanced again, my equity portfolio outperformed the S&P500 by 54%. Yep, S&P500 went up 19%, my equities went up 29%.

From the 8/4/09 rebalance until last Wednesday 10/14/09 my equity portfolio outperformed the S&P500 by 19%.

This makes it kind of hard to guess where my portfolio balance will be when the S&P reaches some future target.

Not that it really matters - because I don't have to do anything until my portfolio gets out of balance by a certain percentage. I just thought it was interesting.

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Old 10-18-2009, 01:57 PM   #11
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30 stocks vs 500 stocks vs 5000 stocks...seems simple to me.
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Old 10-18-2009, 07:42 PM   #12
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The DOW is nothing more than a quick and dirty check on the movement of the market.
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Old 10-18-2009, 07:49 PM   #13
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Quote:
Originally Posted by frayne View Post
The DOW is nothing more than a quick and dirty check on the movement of the market.
I'm not sure how quick it is anymore, so many changes have occurred
the formula might be quite complicated by now. I agree its almost useless
except for the fact it has great marketing.
TJ
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Old 10-18-2009, 10:53 PM   #14
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I don't 'invest' specifically in any company because it is a part of one or the other.
Some of the companies I invest in happen to be in the DOW, some in the S&P, some in the NASDAQ.
For a general view of how the market is doing, I suppose the daily moves of the DOW and S&P stand out.
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Old 10-19-2009, 11:56 AM   #15
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Our portfolio is mostly in broad index funds with a value and small cap tilt. I use VTI (total domestic stock market) and VEU as surrogates (total world market ex-US) for "the market" when looking to see how it is doing on any given day.

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Old 10-22-2009, 09:52 PM   #16
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thanks to all for your opinions. One of the reasons I watch the S&P is that my Vanguard 401k has an S&P fund that I'm invested in. There is no Willshire fund.
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