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<p>[QUOTE="Cloudsweeper99, post: 1337549, member: 3011"]I agree that the S&P contains more stocks and is more representative of the market. But I believe the Dow is more representative of how most people invest. There are many small obscure companies in the S&P that might be closely held or held by certain investment firms, but I don't believe they are representative of what small investors do with their money. One huge flaw in the S&P is that it is capitalization weighted and therefore a disproportionately large amount of money invested in the index is in companies that are priced high relative to their earnings, book value and revenue. So the Dow would normally be the better benchmark for individuals even if the pros use something else. My only point here is to point out that there are other investment choices that should be looked at before declaring one to be better than all for all investors.[/QUOTE]</p><p><br /></p>
[QUOTE="Cloudsweeper99, post: 1337549, member: 3011"]I agree that the S&P contains more stocks and is more representative of the market. But I believe the Dow is more representative of how most people invest. There are many small obscure companies in the S&P that might be closely held or held by certain investment firms, but I don't believe they are representative of what small investors do with their money. One huge flaw in the S&P is that it is capitalization weighted and therefore a disproportionately large amount of money invested in the index is in companies that are priced high relative to their earnings, book value and revenue. So the Dow would normally be the better benchmark for individuals even if the pros use something else. My only point here is to point out that there are other investment choices that should be looked at before declaring one to be better than all for all investors.[/QUOTE]
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