Broken Records

All's not well under the surface of what, notwithstanding a late-summer setback, remains an optically stable US equity market. Although the Dow recently erased its gains for 2023, the only people who care about the Dow in the 21st century are the producers and editors at CNBC. The S&P and the Nasdaq 100 (the benchmarks that matter) are still up handily this year, and that continues to make for a stark juxtaposition with elevated real rates. I realize this is a broken record, and that all r

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One thought on “Broken Records”

I know the DJIA is passe as an indicator. I’ve know this because I’ve been following it since the mid-1960s when no one paid much attention the the S&P and I’m passe so there’s the problem. I was thinking about the size of the split between the Dow and the S&P over the weekend and it seems to me that the space between them has rarely been bigger than it is right now. Your Exh 7 illustrates the conclusion I came to. The Dow fits pretty well as an indicator for the S&P ex the top 8 monsters. Both are essentially flat for the year so far. When originally contrived, the Dow was supposed to be a leading indicator of sorts. Academics when I was in school were just getting involved in the beginnings of “modern finance” and wanted an indicator that reflected the whole market and that was the S&P. Now, with all these dominant stocks in the cap-weighted S&P, it almost seems that that index is now the leader, and the Dow and S&P equal-weighted indexes are the ones that better reflect the total market. Probably sloppy thinking on my part.