5
I may need some face wipes
I'm heading to a battle of the barbecues tonight here in KC. It's being hosted by well-known economic blogger Tyler Cowen. His blog, Marginal Revolution, is always good reading. But before I get my face messy, I thought you might be interested in this chart, pointed out by Kai Ryssdal. As Kai says -- Citigroup, GM, and B of A could go to zero tomorrow and the Dow would barely budge. Sign o' the times.
Yeah, yeah, yeah, I miss Scott too! But it's been nice to 'talk' with him over the Web. Having said that, I have a host of questions as the economic situation develops.
Based on Tyler's chart, does that mean we shouldn't have much faith in the DOW as a market indicator?
Well, Mike, I don't know how much faith we should ever have in the Dow as a market indicator. The Dow is only 30 stocks. The S and P 500 is 500 stocks, a much broader measure. NASDAQ is mostly technology stocks. The Wilshire 5000 is an index of practically every stock traded in the US, so that's even more comprehensive.
The Dow is just a thumbnail, but it's the most widely cited index because it's made up of the most recognizable companies -- GE, GM, B of A, Exxon, McDonald's, Microsoft, Wal-Mart etc. FYI - all the indexes have the same recent chart - down, down, down.
When the recovery begins, that's when it might pay to look at certain indexes. The Wilshire won't tell you which industries are on the upswing because it includes every public company. The Dow, the NASDAQ and the S and P might be more telling at that point.
Danielle, thank you, that means a lot. The only reason I'm not doing that anymore is the hours. It's very difficult to go to work at 1 a.m. every day for several years. But I'm enjoying the chance to connect with people in another forum and you can still hear me on my weekly Marketplace podcast, After the Bell, which is my take on what's happened in the economy each week. Plus, if there's anything you'd like to learn more about, please let me know.
