Long Term Perspective

The Dow Jones Industrial Average is the most widely quoted stock index in the media. As a result, most non-professional investors compare their personal portfolios to the Dow. In fact, investment professionals prefer other market measures. The Dow is a price-weighted index; this means that higher priced stocks have a greater weight than lower priced stocks. This contrasts to the S&P 500, a capitalization-weighted index where the size of the company determines its weight in the index.

The Dow Jones Industrial Average declined for the third straight year in 2002, the first time a three-year drop was posted since 1939-41! The Dow decreased 16.8 percent in 2002. From the perspective of the long-term investor, the 10-year average dropped from 13% in 2001 to 10.9 percent in 2002.

Short Term Perspective

The 30 industrials in this index are: AT&T, Alcoa, American Express, Boeing, Caterpiller, Citigroup, Coca-Cola, Walt Disney, DuPont, Eastman Kodak, Exxon Mobil, General Electric, General Motors, Hewlett-Packard, Home Depot, Honeywell, IBM, Intel Corp., International Paper, J.P.Morgan Chase & Co., Johnson & Johnson, McDonald's, Merck, Microsoft Corp., 3M, Phillip Morris, Procter & Gamble, SBC Communications, United Technologies and Wal-Mart Stores.

In October 2003, the Dow posted the fourth straight year-over-year increase (16.7 percent).

The Dow resumed its path of monthly increases in October with a 5.7 percent spurt. October is a scary month for investors because of the history of major stock market crashes during the month. In fact, September has the record of actually posting more and larger declines than the month of October.