Unfortunately, there is nothing magical about these two types of American stock market indices. The words Dow Jones by themselves can connote different meanings.

The Dow is one of the most widely tracked stock market indices in the world and oldest, dating back to when founder Charles Dow first established it. The companies that are included in the index have the largest market capitalizations, which is mathematically determined by multiplying the price per share by the number of outstanding shares.

I can see why the constant news and media stream of this information may lead an investor to believe these indices have magical, predictive powers —which they do not! There is no known predictor of any market. What you should do is find an advisor who will assist you in creating a diversified portfolio based on various factors such as age, available assets, and spending needs. They are both indexes and are used as benchmarks for many money managers and investors. Perhaps the most important investment lesson I've learned is that investment returns must be unpredictable and that uncertainty is the reason why nearly any investment carries a positive expected return note: For thousands of years we have been conditioned to reduce the uncertainty associated with where we'll get our next meal, where we'll find shelter, etc.

For most, our investment portfolios represent this source of security to meet our essential needs, but facing an uncertain future often leads investors to develop complex -but often destructive- approaches to investing, all in pursuit of feeling more confident about the future.

This is what leads to market timing strategies, algorithmic trading, etc. The Dow Jones Industrial Average DJIA is a collection of 30 US stocks. Their collective performance is what is represented each day as the DJIA. It is an "index" or barometer of the performance of large US companies.

Thus, it is a more reliable indicator because it is a bigger sample. Neither of these indexes is a predictor of the US stock market. They are measurements of performance of one aspect large companies of the US stock market. Predictions are not useful. Consistent investing into a broadly diversified portfolio for years is useful.

Don't try to predict. Use your time and energy in more useful ways. How Will Travis Kalanick's Exit Affect an Uber IPO?

Wal-Mart Stock Decline Should Offer Buying Opportunity. Dictionary Term Of The Day. A measure of what it costs an investment company to operate a mutual fund.

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U.S. Stock Market Data - Dow Jones, Nasdaq, S&P - CNNMoney

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