Research (Investicniweb.cz)
World markets  |  March 16, 2013 16:27:32

Shares Dow move to 15,000 points



The Dow broke last week, its historical price record. Titles that stretch traditional index up? Prospects of shares, without which we currently DJIA celebrate new highs are still very optimistic. If at least meet the expectations of analysts, meta 15tisícová not just wishful thinking bull herd.

First we need to understand the method of compiling the Dow Jones Industrial Average (DJIA). It is a cost-weighted index, which plays the role of the market capitalization of companies. Monitored seven stocks with the largest weights presented last week, about 43% performance of the whole index.

Why is not entirely accurate label for the DJIA index, even though it some investors considered the benchmark market?

For example, General Electric at the time had a market capitalization of USD 245 billion with a price per share of $ 23.59, received only 1.27% of the index weight. In contrast, 3M 5.63% weight in the index, a price per share of $ 104.45 and United Technologies to 4.9% by weight and the share price reached $ 89.13 together just 159miliardové market capitalization.

Thus, if for example the 7 components with the lowest weights (collectively represent only 7% of the index) rose price even doubled, while others would share stagnated, the entire index would 15tisícové off track even close.

Calculations show IndexArb.com what weight should individual stocks in the index to the 6th March 2013.

Weights of individual stocks in the Dow Jones Industrial Average
Source: indexarb.com

An interesting graphic prepared after overcoming a record level of the Dow also editors Wall Street Journal. It shows the extent to which the shares contributed to the strengthening of the index from the ninth floor of the stock market March 2009. An interactive version of the article after clicking availablewsj.com/article/SB10001424127887324539404578342723780666726.html "> HERE.

Which stocks and how they have contributed to the growth of the DJIA index to historic highs?
Which stocks and how they have contributed to the growth of the DJIA index to historic highs? Source: WSJ

However, apart from the somewhat misleading way the Dow is calculated, and look at the 7 shares that most affect its value and should not be missed in the portfolios of long-term investors.

What specific actions should help the Dow at 15000 points, can be found on the web Investment

Read also:

Guess which country euro area according to the IMF in 2016 GDP will grow most

Guess which country euro area according to the IMF in 2016 GDP will grow most

Little hint: In the fourth quarter of 2012 dropped its economy by 5.7% year on year.


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Akcie, které posunou index Dow na 15 tisíc bodů

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