Stock Market Today

The Dow Jones is a company that publishes financial information, like the NY Times or Washington Post publishes political information. The Dow Jones Industrial Index is a composite, or average, of a specific number of most commonly traded companies on the industrial market. There are also others, like the NASDAQ or the S&P, which are a composite of the more common companies traded on their market. As with any average, it reflects trends but doesnt tell the whole story. It’s a snapshot in time.

Let’s say the average rainfall in your area has been 24 inches each year. This year (9 months in) it’s only been 18 inches. The trend is that rainfall is lower this year, but certainly doesn’t mean a drought. And the year is not yet finished, either. Still, it’s a caution to look at other factors, too, before making a snap decision. (Say, like starting a boat rental business when lake levels are down?)

For people who don’t understand the market, the drop in the Dow means panic. But those same people think that a meteoric rise in the Dow is good news. A sudden, inflated rise in stocks is just as unstable as a sudden drop. Remember the DotCom bust 10 years ago? People were investing gobs of money in DotCom stocks just because they were the new thing. But there was nothing substantial about them, and many crashed.

Take houses. If you’re buying and selling them, like those flipping shows, at some point, you’re going to take a bath when the ones you’ve bought suddenly lose value due to artificial rise in values from speculation. But if you’re living in a home that you’ve bought, it doesn’t matter if the value has dropped since you’re still able to live there anyway. Of course, it you change jobs and have to move, it matters how much you can sell it for, and whether you’ve made a little profit or a lot of profit on it. That’s where trends matter when considering where to buy, and that what the Dow is. Just a picture of a constantly changing trend that tries to give an idea of value in the short term.