Although he has never served as a CEO or built an empire from scratch, Charles Dow’s name is forever intertwined with the financial world because of the average market that bears his name. However, Dow’s contribution far exceeded his famous average. His motivation is to open the world of advanced finance to the general public. This article will look at the life of Charles Dow.
Not exactly Wall Street
There is no financial page in Charles Henry Dow’s crib. On November 6, 1851, he was born on a farm in Connecticut. Although he had no formal training and little education, Dao left the farm at the age of 21 and made his mark in the press.He found a series of journalist jobs for different publications, and soon discovered that he had both a talent for historical works and an interest in business.
The editor encouraged Dow to enter the financial field, and the young reporter began to write investigative articles on various industries. During his reporting process, Dow interviewed many capitalists, financiers and industrialists. Through these interviews, he learned about the methods Wall Street insiders use to evaluate stocks.
Bring Wall Street to the Main Street
In 1882, Charles Dow and his colleague Edward Jones decided to start their own company Dow, Jones & Company.Their first book published in 1883 was called “The Customer Afternoon Letter.”This is a two-page summary of the financial news of the day, including certain stock price changes, listed in an easy-to-understand format. When many reporters accepted bribes to raise stocks in their articles, Dow established a reputation for impartial analysis. More importantly, he wrote an analysis that most people can understand.
The predecessor of the Dow Jones Industrial Average appears in this small newsletter, which is the average index of several major stocks in the shipping and rail industries. Dow hopes to include a market average that allows his readers to understand whether the market is rising or falling, so as to provide some clarity and overall picture, otherwise it is easy to lose this information by focusing on the rise and fall of a large number of stocks. By 1896, the first DJIA was calculated using the top 12 stocks on the market. The initial calculation was a simple sum and division, and the first published average was 40.94.
Wall Street Journal
Afternoon letters from clients have circulated thousands of copies and are very popular, which prompted Dow Jones and Jones to start the Wall Street Journal. Its first issue was issued on July 8, 1889.The two use a wider journal format to deliver more and more financial information, making it easier for the public to keep up to date.
Before his average and the Wall Street Journal, there was no consistent or reliable source of stock information. Companies may try to use too much information to hide their true value or cover up revenue, which makes it difficult for laymen to judge the positive or negative side of the market. The Dow Jones Index removes the fog and provides people with the same quality information that was once only available to insiders. The Wall Street Journal quickly became the most-read financial newspaper in the United States, so the Dow Jones Index became the main average index for people who want to understand the market trend.
Although Dow believes that full disclosure of the company is the key to understanding which company to invest in, he is beginning to notice the pattern of changes in market averages. The average seems to have experienced several types of measurable trends, so the Dow Jones Index hopes to be able to discern basic market rules from these trends. Dow carefully observed his averages and formulated a theory now called Dow Theory, which uses the highs and lows of his market averages to predict market trends. But Tao never officially explained his theory, and it was not fully understood, if not fully understood, until his death in 1902.
Dow Jones Legacy
Dow’s legacy has three aspects:
- The Wall Street Journal had been widely circulated at the time of his death, it continued to expand, and it is still one of the most important newspapers in the world today.
- Dow initiated a campaign for many listed companies to provide full financial disclosure to the public. This is now taken for granted, but if there are no people like Dow to dig out the facts for the public, investment may still be an activity of the wealthy and well-connected.
- The various Dow market indexes are a revolution for investors. They are the benchmarks to measure our performance, or the performance of the professionals we hire in the overall economic situation, and they are also a source of data that supports various theories, strategies, and analyses.
Charles Dow has affected the foundation of our modern financial market. Although DJIA may lose its prominence as the most important index in an increasingly globalized future, the importance of its creator’s contribution will not change over time.