Dow Jones Update

Charles Dow is one of the biggest legends of Wall Street for two very important reasons - he created our financial bible, The Wall Street Journal (WSJ) and our first market barometer, the Dow Jones averages. It is also the father of technical analysis. Ironically, the Dow went relatively unnoticed for his achievements and died peacefully at age 51 in his modest apartment in Brooklyn in 1902 - years before he was credited with revolutionizing the way we talk about the award.

You could explain "his" theory and its technical applications, but in his lifetime, he never established a "Dow Theory," in itself. When he started compiling the stock market averages in 1884 - before the existence WSJ same - he had not established either, except an index with an index "all inclusive" for analyzing the stock market. He later added his intuitive views. In fact, the Dow Theory as we know it today is only the name and excerpts from his WSJ editorial twenty years after his death by other market technicians, as William P. Hamilton.

Standing over six feet tall but slightly stooped, and weighing more than 200 black eyes and eyebrows, a beard jet, walrus mustache and the ultra-conservative Dow had a serious air about him, talking with measured speech and recalling a college professor too serious. He never raised his voice and said he often took him 24 hours to get angry and when angry, he remained angry. The analogy is strengthened by the professor that, by working during the end of the robber baron era, he never chose to play this game, never tried to make a fortune for himself Market He chose instead, to be an observer and commentator margin.

He was born on a farm in Connecticut in 1851 and worked odd jobs as a kid. His father died when he was six. When he was old enough to choose his career, he has chosen to abandon life on the farm for the pen. After a little education, he apprenticed for six years with the influential newspaper in Massachusetts, the Springfield Republican. Then he moved to a document in Providence, Rhode Island, where he found his niche in financial writing while covering the mining industry beat.

Having made a modest name for himself, Dow 31, the next ventured to New York and in 1882 founded Dow Jones & Company with his fellow journalist Eddie Jones. They used office equipment used and worked on a small one-room office in a dilapidated building at 15 Wall Street, building a profitable news agency. They provided daily updates of financial news to subscribers, who were mostly typical Wall Street moves. printed news was scarce in the street, and there was a value to be connected to new sources, although they are hardly more reliable than gossip proliferate through the crowd. Thus, their service is invaluable, and the firm has grown rapidly in the year. Soon they began to publish a newspaper titled The two-page afternoon Customer Letter - the predecessor of the WSJ is.

It was in the letter that Dow posted its average, which he left unnamed. For example, February 20, 1885, his average was compiled from 14 companies - 12 railroads and two industrials - which during the closing was 892.92. By dividing this figure by 14, he came up with 63.78. Since almost the day was 64.73, the market was said to a decrease of nearly one point for the day. An observer would have seen more accurate it was at 1.47 percent. The index was the first attempt to precisely measure sustainable market. The index also gave rise to what would become the entire realm of "technical" analysis, in which people predict the future price activity based on historical prices.

The letter raised in the WSJ, in 1889. A cost of $ 5 for an annual subscription, 2 cents per copy and 20 cents per line for the ads, the newspaper said contained four pages.