Actual value of the Dow

Discussion in 'Trading' started by Bearbelly, Feb 23, 2006.

  1. I dont do fundamentals or even trades stocks so this is not my area of knowledge but am curious if anyone can give me the true value of the 30 stocks involved, ball park of course. Im just wondering how much room there is for growth. Is 11000 close to the actual value of the 30 companies involved or is it over/under valued at this figure? These are all well established companies so it would seem to me the growth factor would be slow and the primary value would be hard assets plus projected earnings.
  2. true value is subjective. who knows. harry dent says dow 36000 in 3 years. we have a ways to go for that one.
  3. I'm not sure I understand what you mean. 11000 reflects the price of the stocks not the value, so yes it is accurate. The dow doesn't use market capitalization.

    Unless you meant something else?

  4. I understand that there is a lot of subjectivity in the pricing but it seems to me that these 30 companies are well established companies with growth not being the main incentive to buy them so they are worth their hard assets and projected earning and dividends and so it seems to me that you should be able to arrive at a fairly accurate figure for what they are actually worth. I might be wrong.
  5. Yes you can, but the dow is a price weighted average not a value weighted one. To do that you would have to find what you feel the value of each stock is worth and decide if they are under or over valued as a whole. Then sell or buy the index accordingly. The actual dow number is pretty much meaningless. Only the percentage above or below the value you place on it matters.
  6. alanm


    The market decides what they're worth every day. The difference of opinion, supply and demand, and changing fundamentals is what makes that agreed-upon value change. Of course, valuation is not just limited to information regarding the company itself. It's also affected by other companies in the sector (bad news for a competitor can be good, bad, or neutral to the subject stock), other sectors (money movement from one sector to another, affecting supply/demand), general economic news, terror and litigation discounts, etc.
  7. and alan, you left out the most important factor - EMOTION

    a big determinant in the price discovery process.
  8. Cheese


    This is like asking if you belly button hole had as little or as much debris hidden in it as the last time you gave it any attention.

    Remember it is not 'value' .. its 'alternative value'. In other words the value is being determined by whether investment should be kept in or out of the top 30, or instead be put into cash, bonds, mid cap stocks or even smaller cap stocks. This is aside from whether the rate of money flow in the economic system is at a level that will grow or weaken stock price levels.
  9. for DJIA here are some #'s

    current yield is 2.3 %, CURRENT PE is 21, current payout ratio is 43.3, current relative to value range is 123.

    as an example, if you think DJIA is fairly valued at 5% yield, then the DJIA would have to fall to 5089


    of course, value is debatable. price is not. tis what it tis
  10. mizer


    When the Dow Jones Industrial Average reached each of eleven 1,000-point milestones

    Nov. 14, 1972
    76 years

    Jan. 8, 1987
    14 years

    April 17, 1991
    4 years

    Feb. 23, 1995
    4 years

    Nov. 21, 1995
    9 months

    Oct. 14, 1996
    11 months

    Feb. 13, 1997
    4 months

    Jul. 16, 1997
    5 months

    Apr. 6, 1998
    9 months

    Mar. 29, 1999
    12 months

    May. 3, 1999
    1 month
    #10     Feb 26, 2006