Theory does not say the DOW should under- or overperform the S&P 500. My comment had nothing to do with the performance of the index. What makes the DJIA a bad index in my view is that it's weighted by the share price of the underlying companies, rather than by market cap. So Goldman counts more than Microsoft in the DJIA simply because of its higher NAV, even though Microsoft's market cap is more than 20X that of GS. That just makes no sense whatsoever, and there's no real reason to accept its limitations as an index.The theoreticians might think so but in practice, the DOW and the S&P 500 are almost identical in performance.There are few funds tracking this “index” because it’s a pretty terrible index.
Albert Einstein has a famous quote: “In theory, theory and practice are the same. In practice, they are not.” Theory says the DOW should under-perform but in practice, it does not.
Statistics: Posted by 02nz — Mon May 06, 2024 8:32 am — Replies 19 — Views 1527