Rus Articles Journal

What is Dow`s index - Jones?

the world are shaken many years by financial crisis. Announcers of news buzz is disturbing, is soothing: “Dow`s index - Jones fell again!“, “Today trade to New - the York exchange came to the end with long-awaited raising of an index of Dow - Jones“.

What the index of Dow - Jones such, shaking foundations is? And what for the eternal revolutionary this Dow - Jones? And maybe, it is in general two different person, Dow and Jones?

It is remembered, at school the physics to us was taught by Nikolay Petrovich Yurchenko. Taught thoroughly and informally. Among other things he warned future entrants that at admission examination on physics can be “cut off“ also on absolutely a silly question. To ask, for example: “Boyle - Marriott is the French scientist or English? “ And right there by the way explained that Boyle is the English physicist, and Marriott - French, that is, Boyle and Marriott - two different persons. And here the Gay - Lyussak - one person, the French physicist with a double surname. It seems as Solovyov - Gray-haired.

So, we will clear up. Dow`s index - Jones, the main and oldest index of exchange activity, is called by the names of two people: Charles Dow (Charles Henry Dow) (1851-1902) and Edward Jones`s (Edward Davis Jones) (1856-1920) .

Charles Dow forever imprinted the name in that section of financial science which it is accepted to call the technical analysis of securities now. However at the beginning of the life its relations with finance were same, as at most of people: they were always not enough. Ch. Dow not in a family of financial oligarchs, and on a farm in the State of Connecticut was born. The fellow had to get into a hard work very much early. When he was six years old, the father died, and the family had to fight for a survival naturally. Therefore did not leave secondary school of Ch. Dow.

But he was not rather stupid rural little fool and by 18 years already worked as the correspondent of the famous newspaper. Business news were one of the subjects interesting the young journalist. Brilliant analytical articles of Ch. Dow made his name popular both among readers, and among business people soon. In 1882 he moved to New - York and in a year based together with partners, Edward Jones and Charles Bergstresser (Charles Bergstresser), the first edition devoted to the analysis of business life of America here. Small, in two pages, the daily newspaper gained popularity, and in 1889 on its basis the edition of the Wall Street Journal newspaper began . Today this newspaper safely exchanged the second century of the existence. She is the recognized leader of the American and world financial periodical press.

And for the time it was just revolutionary edition. Until then nobody published daily exchange reports. Information on a financial condition of the companies was also published extremely seldom. The reason was obvious: heads not without the bases were afraid that the publication disclosing the cost of assets of the company can lead to its unfriendly absorption by larger corporations. The law which obliged the firms issuing securities to publish quarterly and annual reports was adopted in the USA late enough, only in 1934. Rules of the game at the exchange were changed not by legislators, but the journalist Charles Dow and the statistician Edward Jones.

Their newspaper could seem to usual public fatally boring. You amusing stories from life of celebrities, juicy gossips! The main part of each number tables of market rates held, places of figures and nothing any more. Articles were devoted to a financial condition of the companies which are quoted at the Stock Exchange. Too reading indigestible! But the Wall Street Journal newspaper intended absolutely for other reader who “swallowed“ it from the first and to the last page as his financial success depended on it. Or failure.

In the same way the chief of the General Staff with huge interest reads prospecting reports about a condition of enemy army - too, as a rule, boring tables. Stories about concrete firefights and adventures of intelligence agents interest him a little. Firefight or a pursuit - the most interesting places in adventure novels. But they usually mark a failure of prospecting group.

Ch. Dow`s newspaper made open for all very important information which till that time was possessed by the few. Thereby large and small players at the exchange were equalized. Everyone became to himself a field marshal.

The edition of the newspaper put H. Dow and E. Jones before need to enter some global indicator of activity of New - York stock exchange. For this purpose they chose ten largest companies whose actions were quoted at that time at the exchange, and began to determine daily the average cost of securities of these companies. It was also the first index of Dow - Jones . It is natural that growth of this index was connected with growth of cost of the indexed companies (so, somewhat, all American economy), and falling fixed falling of business activity and reduction of the capitals of the main players of business of that time. It is interesting that among ten largest companies chosen by Ch. Dow and E. Jones for calculation of the index nine were railway. 1880 - e years - time of rough construction of the American railroads.

The present index of Dow - Jones (it is called of Dow Jones Industrial Average , or in abbreviated form of DJIA ), in principle, pays off also. It is natural that among the major companies of the USA displayed today there are no railway companies, but there is Microsoft, Coca - Cola and McDonald’s. Also the NASDAQ index characterizing activity of off-exchange transactions of purchase and sale of securities is calculated.

In other countries the index of exchange activity pays off similarly as the average cost of the capitals of the major national companies. But in each country this index is called in own way. The NIKKEI index testifies to activity of the Tokyo exchange , and business activity of economy of Germany is characterized by the DAX index .