Opinion

Matt jr

Left of the Decimal

Dow Jones has removed General Electric from the Dow Jones Industrial Average (DJIA) and replaced it with Walgreens Boots Alliance.  GE was an original Dow stock and was part of the index for over 100 years.  The Dow is how your parents consume the stock market which is why newscasts tend to report that information in Dow points.  This is a huge deal, right?  Not from an investing standpoint. The DJIA is price-weighted, meaning that stocks with higher prices make up a larger portion of the index than stocks with a lower price.  This is different than an index like the S&P 500 which is market cap-weighted (the size of the actual company).  It’s interesting to note that GE is getting replaced by a company about half its size by market cap so it’s not like GE is getting the boot (pun intended) because of its size, it’s because the…

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My Favorite Posts This Week

I try to share good posts via Twitter.  A bunch of people were writing solid stuff this week:   A Little Knowledge is Dangerous – Nick Maggiulli – Surprising stat about survival rates for people lost in the wild.  Kids six and under have a surprisingly high survival rate while one of the lowest is for kids seven to twelve.  Younger kids follow their instincts.  Older kids overthink and panic.  This maps over to investing in that knowing a little bit can lead to devastating over-confidence. Is Robert Shiller Right that Passive Investing is Dangerous? – Cullen Roche, Chicken Farmer – This is a sensible layout of one argument in the active/passive debate, pointing out that the sides often aren’t even debating the same points. How to Deal with Market Moving News – Ben Carlson – Binary thinking and single variable analysis are killers to long-term portfolio success. Backtested Strategies:…