How is the Dow Jones Industrial Average computed?
I’m tempted to say, “not very well,” although I don’t want to be hard on a venerable stock-market benchmark that’s been around for more than a century. Still, things have changed a lot since Wall Street Journal co-founder Charles Dow began computing his index in 1896 to track the industrial sector of the American economy. The basic methodology of the Dow, on the other hand, really hasn’t fundamentally changed, which makes it a frequent target of index purists.
