The Dow: Then and NowSubmitted by Karstens Investments on May 31st, 2019
By Ryne J. Bessmer, AIF®
Charles Henry Dow was born in Sterling Connecticut, the son of a farmer, in 1851. He never received a formal education but began reporting at age 21 with The Springfield Daily Republican in Massachusetts. He continued his career representing mining companies in Colorado who would hire journalists to raise money for their operations by writing news articles to attract investors. He was known for his integrity regarding his journalistic pursuits. His creation of the Customer’s Afternoon Letter, later the Wall Street Journal, gave the public a succinct and easy to understand summarization of the financial markets . The creation of the Dow Jones Industrial Average (DJIA) became an extension of this mission. Charles Dow wanted the public to be able to determine the direction of market movement with a simple and easy to read average.
May 26, 1896, was the first day that Charles Dow published the Dow Jones Industrial Average. The DJIA was originally comprised of 12 companies. At its public inception it was made up of companies dealing in sugar, leather, electric and lead among other industrial-related companies. Today, the DJIA is comprised of 30 companies.The last original company from the DJIA was General Electric which was replaced on June 26, 2018, by Walgreens Boots Alliance. It is incredibly interesting to look at how much the index has changed over the years. Even looking back only forty years, it is fascinating how much turnover has taken place in the United States economy in such a short time span. In today’s environment, companies are on a tougher playing field competing with the internet and the low-entry cost in taking an idea to a business in the twenty-first century. Take a look at the difference in the charts below, and ponder the thought that upwards of 80% of the companies on the Dow today may not be there in just three or four decades.