The Growing Spread Between the Dow and S&P 500

I’m not a fan of the Dow Jones Industrial Average. My major complaint is that it’s a price-weighted index whereas the S&P 500 is weighted by market value. Also, it’s only 30 stocks. When I refer to “the market,” I’m almost always referring to the S&P 500.

Normally, the two indexes behave pretty similarly — but not this year. The S&P 500 is opening up a big lead against the Dow. If the Dow were up as much as the S&P 500 is YTD, then it would have to be 670 points higher than it is now.

When market gurus talk about “the market,” it’s not even clear which one we’re talking about.

Posted by on November 19th, 2012 at 12:51 pm

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