The Early Years of the Dow

• While later Dow activity would evidence larger numeric gains and losses, the early Dow years exhibited greater volatility. In August 1898, the Dow fell to 28.48, more than 30 percent below its opening two years earlier. By September 1929, it had risen to 381. A month later it plunged over 24 percent in two days. By 1932 it had fallen back to within a point of its first day, a decline of almost 90 percent from the peak.
  
  

The Dow from 1985 to 2011

• By 1987, the Dow had risen above 2,000. Then on October 19, it dropped more than 22 percent, its greatest one-day percentage drop ever. In the following decade, it climbed above 10,000, although fitfully and with intermittent days of large losses. The first decade of the new century saw both years of steady upward progress and short periods of sharp loss, including a drop by October 2009 back to 7,286, a decline in a few months of more than a third. By 2011 the Dow had climbed back above 12,000 again.
  
  

Dow's Relation to Other Indices

• At first glance, it might appear that using an index of only 30 stocks as an indicator of broader market movements has inherent limitations that lessen both its utility and general reliability. Because the Dow Jones Company specifically limits the selected stocks to large caps, leaving out of the index smaller and newer companies, it might appear as well that the degree of volatility found in the general market or in broader indices might exceed that in the Dow. In fact, comparing the S&P 500 index and the even broader Wilshire 5000 with the Dow shows that the Dow does what professional investor Bill Barker, writing on The Motley Fool website, called "a remarkable job" of tracking broader indices.
  
  

The Utility of the Dow for Individual Investors

• By providing an accurate daily snapshot of the market , the Dow closing number gives investors, particularly those who do not often delve deeply into market details, a valuable assessment tool. Those who need more detailed information can go online and compare each of their own investments with Dow performance figures over representative market periods, even using the Dow data to provide comparative moving averages and trend lines.