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From: ka@hropus.UUCP (Kenneth Almquist)
Newsgroups: net.invest
Subject: Re: Is new Dow Jones High Phoney?
Message-ID: <260@hropus.UUCP>
Date: Tue, 11-Feb-86 01:39:08 EST
Article-I.D.: hropus.260
Posted: Tue Feb 11 01:39:08 1986
Date-Received: Wed, 12-Feb-86 08:08:55 EST
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Organization: Bell Labs, Holmdel, NJ
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> With the Dow now breaking 1600 yesterday, I was wandering how much of
> that reflects the Dow's ability to pick companies rather than the
> actual state of the market.

When it comes to bad stock picks, few people can beat the people who
select the stocks to be included in the Dow.  Depending on how you
figure it, every change to the list of stocks in the Dow has consisted
of replacing better performing stocks with worse performing stocks.
In practice the Dow does a reasonable job of reflecting the market,
although it underperforms it over the long term.  The S&P 500 index is
better than the Dow, although it has a lot of oil stocks in it.
				Kenneth Almquist
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