International Journal of Advances in Science, Engineering and Technology(IJASEAT)
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Volume-8,Issue-1  ( Jan, 2020 )
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Submitted Papers : 80
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  Journal Paper

Paper Title
Problems With The Dow Jones Industrial Average-A Simple Unweighted Arithmetic Mean: An Issue Re-Revisited

Abstract
The Dow Jones Industrial Average (DJIA) is perhaps the most widely watch stock market index. It is calculated as a simple unweighted arithmetic mean or average. This paper will examine the calculation of the Dow and highlight a number of key problems which limits its usefulness as an overall or broad market gauge. Stock market indices are important for a number of reasons. First, they are considered to be leading indicators of economics growth. Second, they are standard against which individual investors can measure the performance of their own portfolios, and third they are used as benchmarks for professional fund managers. It is therefore very important to examine the way any index is calculated and what advantages or drawbacks are inherent in using that index. Several other important indices are in the form of weighted means or index numbers. Included in this category are the Standard & Poor’s Industrial Average, the New York Stock Exchange Industrial (NYSE), the National Associate of Securities Dealer Industrial Average (NASDAQ), and others. One very different type of calculation is the Value Line Industrial Average (VLA). This article will also brief explore each of these and how they handle the problems associated with the DJIA.


Author - Richard D. Gritta, Brian Adams, Robert B. Pamplin

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