Dow Jones Industrial Average

The Dow, as it is popularly known, is probably the most widely watched indicator of American stock market movements. The Dow has many virtues: it is more than 100 years old, it is well known, and by including only 30 stocks, it is manageable. These stocks tend to be those of the largest, most established firms and represent a range of industries, too. Unfortunately, there are only 30 of them, and they are not always an ideal proxy for the thousands of stocks that make up the market as a whole. In recent years, broader indexes such as the Standard & Poor's 500 (for large companies), the Russell 2000 (for smaller companies) and the Wilshire 5000 (for an especially broad measure) have gained currency, in part due to the rising popularity of index investing.



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