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Broken Records
All's not well under the surface of what, notwithstanding a late-summer setback, remains an opticall
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.