Neatolicious Fun Facts: Dow Jones Industrial Average

Broker: what you become after investing in stocks
                                               - Wall Street joke

Continuing our quest to unearth fun facts from A to Z, here's the latest Neatolicious Fun Facts article. "D" is for the Dow Jones Industrial Average. Given the current economic crisis, here are some timely fun facts about the granddaddy of stock market indices:

1. Origins: Charles Dow

The Dow Jones Industrial Average (the DJIA or The Dow) is a stock market index. It comprises of stocks of select large companies and is used to gauge the performance of the whole stock market.

The Dow was created by American journalist Charles Henry Dow on May 26, 1896, as part of his research into market movements. That explains the "Dow" in Dow Jones, but what about the "Jones" part? That was named after Dow's business partner Edward Davis Jones, a statistician (not related, as far as I could tell, with the current Edward Jones company). Interestingly, Jones didn't have anything to do with creating the stock index, other than being Dow's business partner in their company Dow Jones & Co.

Dow and Jones didn't set out to be in the business of keeping track of the stock market. They were journalists who had been working for a newspaper before they decided to go into the financial news business for themselves in 1882 (with another business partner named Charles Bergstresser). The trio opened shop in the basement of a lower Manhattan candy store that later became the New York Stock Exchange. (Source)

The Dow, Jones & Company (they later dropped the comma) published daily hand-written news bulletins called "flimsies" delivered by messengers to subscribers. A year later, they came out with the "Customers' Afternoon Letter," which contained the Dow Jones Industrial Average.

You may not have heard of the Customers' Afternoon Letter, but I'm sure you know what the newspaper later became: The Wall Street Journal (the first edition of which was just 4 pages long and sold for 2 cents).

2. Was the Dow Jones Industrial Average the oldest stock index?

Nope - on July 3, 1884, Charles Dow created the first one: the Dow Jones Transportation Average. It consisted of 11 transportation-related companies (most of which were railroads).

3. The first 12 stocks listed and what happened to them

The first 12 stocks listed in the Dow Jones Industrial Average, published on May 26, 1896 were industrial (or so called "smokestack" companies). Of these 12, only 1 (General Electric) is still doing business under the same name:

(Source: Dow Jones FAQ)

Oh, and the first day's closing is 40.94. If you had invested $1 then, you'd have $169 today, a return of 16,828%.

4. A "Blue Chip" Index

If you're financially savvy, you'd already know this: the Dow Jones Industrial Average is a "blue chip" index, meaning it is comprised of just 30 of the largest companies in the United States.

But why "blue chip"? The term comes from casinos, where blue chips have the highest values. Its first use to describe stocks was coined by Dow Jones staff Oliver Gingold in the early 1920s:

That term apparently got its start in 1923 or 1924 when Gingold was standing by the stock ticker at the brokerage firm that later became Merrill Lynch. Noticing several trades at $200 or $250 a share or more, he said to Lucien Hooper of W.E. Hutton & Co., that he intended to return to the office to "write about these blue-chip stocks." Thus the phrase was born. It has been in use ever since, originally in reference to high-priced stocks, more commonly used to day to refer to high-quality stocks.

5. How Now, Dow Jones

Marlyn Mason, Tony Roberts and Brenda Vaccaro in How Now, Dow Jones
(Photo and more on the musical by Skip Card of Playbill: Link)

In 1967, lyricist Carolyn Leigh came up with the idea of a Broadway musical comedy based on the stock market. She collaborated with Elmer Bernstein (music), Max Shulman (libretto) and David Merrick (producer) to create the musical How Now, Dow Jones. (Source)

Though How Now, Dow Jones was considered a Broadway failure, one song titled "Step to the Rear" became quite popular and was later adapted into The Fighting Gamecocks Lead the Way, the fight song of the University of South Carolina.

6. The best and worst days in the history of the Dow

Given the current economic crisis, it seems that every day brings us bad economic news and even lower stock prices. Indeed, we have seen an incredibly volatile stock market and record-setting daily point gains and losses.

The largest daily point loss was recorded on Sept 29, 2008, when the DJIA lost 778 points (7%). The largest point gain happened about two week later (gain of 936 points or 11% on October 13, 2008) only to be followed with another big drop (733 points or 7.9%). You know what happened next: right now, the Dow Jones Industrial Average has fallen by about 45% from last year.

Riding the Dow T-shirt at Crazy Dog T-shirts

The largest percentage loss occurred in Black Monday of 1987, when the stock markets around the world crashed. The Dow lost 508 points or a drop of 22.6%. Even today economists and financial analysts couldn't come to an agreement as to the reason behind such a crash (some blamed program tradings, others blamed market psychology).

7. Dowism

I can't bear to close on such a DOWn note (get it? it's a double pun), so let's end with this pun: dowism. It's a play on the words Taoism, a Chinese philosophy, and Dow Jones, used to represent the philosophy of consumerism.

Columnist and radio personality Steve Bhaerman, under pseudonym Swami Beyondananda wrote in Duck Soup for the Soul:

That day, the Swami swore off sects completely. Spirit was immaterial, he decided, and he now sought fulfillment by filling himself full of all the material goodies life could provide. He moved to New York to study with the renowned guru of the stock market, Yuan Tibet, who instructed him in the Dowist path. Swami became more and more dependent on the stock market prophet, buying soybean futures like there was no tamari. Suddenly, the price of soybeans plummeted (due, it was later revealed, to a rumor planted by unscrupulous dairy- heir that tofu actually came from between the toes of Himalayan hikers). Swami frantically tried to call Yuan Tibet for his sage advice, but he could not be found. Tragically, there had been some prophet-taking on Wall Street, somebody took him, and he was never heard from again.

(Source)

"Prophet-taking?" Oh hohoho! (by the way, "tamari" is a kind of soy sauce. Clever guy, that Steve Bhaerman).

Next up: "E" (which I haven't decided yet) - in the meantime, check out these articles on Neatorama:

• 10 American Financial Meltdowns in the Past Century
• 9 Most Brazen Ponzi Schemes in History
• Past Neatolicious Fun Facts Articles: Apple, Beer, Chess
• From the Neatorama Online Store: Stock Market, The Ride