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Dow Jones Essay Sample

Dow Jones Pages
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People have made millions thanks to the Dow Jones. There are loads of stock exchanges out there, but the Dow Jones is the most important one out there. It is a stock exchange made up of a lot of important, successful companies, and it is a very good indicator of the economy. A stock exchange has many purposes. It is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Securities traded on a stock exchange include shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. For a company to be able to trade their stocks on a certain stock exchange it must be listed there and they must be a member of the stock exchange. Stocks and bonds are offered to investors on the primary market, but are sold on the secondary market. Some stock exchanges like the Dow Jones have lots of different companies making them up. Thirty of the largest publicly owned companies based in the US are the companies which make up the Dow Jones Index.

The following companies make up the Dow Jones Index: 3M, Alcoa, American Express, At & T, Bank of America, Boeing, Caterpillar, Chevron corporation, Cisco systems, Coca-cola, DuPont, ExxonMobil, General Electric, Hewlett-Packard, IBM, Intel, Johnson & Johnson, JPMorgan Chase, Kraft Food’s, McDonald’s, Merck, Microsoft, Pfizer, Procter & Gamble, The Home Depot, Travelers, United Technologies Corporation, Verizon Communications, Wal-Mart, and Walt Disney. The companies making up the Dow Jones Index have changed 48 times in its 114 year history. Chevron and Bank of America replaced Altria Group and Honeywell in 2008. Also, In 2008 American International Group was replaced by Kraft Foods. General Motors and Citigroup in 2009 were replaced by the travelers companies and Cisco Systems. In 2009, IBM had the highest stock price with 107.24. The Dow Jones is a helpful indicator of the economy. The Dow Jones is a crucial part of the economy. Small and large companies are able to increase their capital by selling shares of their company to investors. Another benefit of selling shares is the money coming into the company.

With the new money, the company will be able to research and sell new products becoming more diversified, and therefore increasing its market share value. When investors make an investment, their money is not sitting idly instead it is in the hands of a company which may increase their production since they have more money. Increased production is a benefit for the economy in areas such as agriculture, industry, and commerce. If a company makes a big increase in its share values, the investors can potentially make a lot of money. For example, if the share prices increase from one dollar to two dollars, then the investors have doubled their money. On the other hand, investors can lose a lot of money, if the share prices go from one dollar to fifty cents. Because of the Dow Jones, companies generally tend to improve management standards and efficiency by having a lot of different owners to meet the demands of shareholders. There are lots of rules for public corporations imposed by public stock exchanges and the government.

Anyone can make an investment in a company in the Dow Jones; it doesn’t matter if it’s as small as one dollar or as large as a million dollars. It’s fair because everyone can own a small part of any company in the Dow Jones, even a multi-billion dollar company which is exciting to some people. The Dow Jones is usually a good indicator of the economy. If it is stable or slowly increasing, it means the economy is strong. An economic recession, depression, or financial crisis could eventually lead to a stock market crash. It is a good idea to monitor stock prices daily, and then invest when they are at a lower than usual price, because it will go back up sooner or later.

Although making a million dollars is a possibility, losing a million dollars is also a possibility. It is a good idea to monitor the stock exchange for a long time to better identify any trends in the index to increase the chances of making a good investment. 30 excellent, huge companies make up this important index often used to see how the economy is doing. With determination and a little luck, any company can make it to the official and highly prestigious Dow Jones Index.

Sources

I found out what the stock exchange was from http://en.wikipedia.org/wiki/Stock_exchange. On my second body paragraph I used http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average and http://www.1728.com/dowjone2.htm. In finding out the value and purpose of the Dow I used http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average.

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