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In response to the article Dr. Stool sent the following email to the editors of Barrooms:
Quote
Mr. Martin:
The problem with all leading market indices is that they are managed. None give a true reflection of the market's performance over the long haul. All grossly overstate actual performance. For example, the Dow Jokes Inflatables includes only one of the original stocks. That would be Dow Joke's business partner in crime General Custer, who is leading the market to its ultimate slaughter under a mountain of worthless debt. But that is a story for another day.
(By the way, no one ever answered me as to whether Mr. Abelson received the coffee mugs I sent him in appreciation for his remarks about Alfred E. Greenspewman. Geez, you people are rude.)
Back to my point. So let's see now, how have those 12 original Dow stocks done in the last 100 years. Here's one, American Cotton Oil. Hmmm. And how about Distilling and Cattle Feeding, or LaClede Gas. Then there's Tennessee Coal and Iron and U.S. Leather Preferred. And of course, Nash Motors, which came later. And how can we forget Woolworth? Here's one that they added in 1930, Hudson Motor. Oops, let's not forget the Victor Talking Machine Company. Or Johns Manville and International Shoe. International Harvester either.
If we included all the stocks that disappeared and kept them in the index at the value they left us with, which was zero, where would the Dow be today?
In view of the misleading nature of the Dow, and all the other BS indexes, I propose the following. Once a stock is in the index it can never be removed. Even if it goes bust and disappears, it must be carried at its market value of zero. If you want to add a new stock to replace one that has gone under, fine. But adjust the divisor accordingly. Since the stock that went to zero still counts for zero in investors' portfolios, and they can never get that money back, to exclude its impact on the future performance of the index is nothing short of fraud. The market's real overall performance is nowhere near as good as the market averages would lead people to believe. The averages are nothing more than cheap statistical tricks used to hoodwink the public into turning their money over to Wall Street.
But of course, distribution is the name of the game, fraud is one of Wall Street's time honored tools, and by promulgating the myth that the Dow somehow represents something, Dow Jones is a co-conspirator.
Dr. Stepan N. Stool
Publisher and Chief of Stock Proctology
Capitalstool.com
Not just the same old bull
The problem with all leading market indices is that they are managed. None give a true reflection of the market's performance over the long haul. All grossly overstate actual performance. For example, the Dow Jokes Inflatables includes only one of the original stocks. That would be Dow Joke's business partner in crime General Custer, who is leading the market to its ultimate slaughter under a mountain of worthless debt. But that is a story for another day.
(By the way, no one ever answered me as to whether Mr. Abelson received the coffee mugs I sent him in appreciation for his remarks about Alfred E. Greenspewman. Geez, you people are rude.)
Back to my point. So let's see now, how have those 12 original Dow stocks done in the last 100 years. Here's one, American Cotton Oil. Hmmm. And how about Distilling and Cattle Feeding, or LaClede Gas. Then there's Tennessee Coal and Iron and U.S. Leather Preferred. And of course, Nash Motors, which came later. And how can we forget Woolworth? Here's one that they added in 1930, Hudson Motor. Oops, let's not forget the Victor Talking Machine Company. Or Johns Manville and International Shoe. International Harvester either.
If we included all the stocks that disappeared and kept them in the index at the value they left us with, which was zero, where would the Dow be today?
In view of the misleading nature of the Dow, and all the other BS indexes, I propose the following. Once a stock is in the index it can never be removed. Even if it goes bust and disappears, it must be carried at its market value of zero. If you want to add a new stock to replace one that has gone under, fine. But adjust the divisor accordingly. Since the stock that went to zero still counts for zero in investors' portfolios, and they can never get that money back, to exclude its impact on the future performance of the index is nothing short of fraud. The market's real overall performance is nowhere near as good as the market averages would lead people to believe. The averages are nothing more than cheap statistical tricks used to hoodwink the public into turning their money over to Wall Street.
But of course, distribution is the name of the game, fraud is one of Wall Street's time honored tools, and by promulgating the myth that the Dow somehow represents something, Dow Jones is a co-conspirator.
Dr. Stepan N. Stool
Publisher and Chief of Stock Proctology
Capitalstool.com
Not just the same old bull
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