Would anyone care if the Dow Jones Bergstresser industrial average plunged 500 points in a single day?
Probably not.
That's what the Dow Jones industrial average should have been called when it was established 100 years ago today, if Charles M. Bergstresser had been given his due. Bergstresser, a stocky, balding journalist known for "short arms and deep pockets," helped finance the creation of Dow Jones & Co. But his name was omitted from what has become the world's most watched stock index because it was too long.
"He was the unsung hero," says Richard J. Stillman, professor emeritus of management at the University of New Orleans. "But Dow Jones Bergstresser wouldn't have been quite the title."
It was Charles H. Dow who created the first stock index, and it first appeared in print on May 26, 1896. It now seems as much a part of daily routine as that first cup of coffee. For millions of commuters, the national drive-time mantra is this: Traffic, weather and the Dow Jones industrial average.
The Dow is The Word, and to some people it is the stock market. Investors, brokers and the media scrutinize each uptick and drop on the assumption that it has cosmic meaning for the national economy, that it alerts investors to whether the day has left them enriched or impoverished.
But as the index celebrates its centennial, not everyone is convinced that the Dow is still a useful gauge of the stock market and the economy in general.
The Dow represents just 30 stocks, ranging from Walt Disney Co. to Minnesota Mining & Manufacturing Co. to Woolworth Corp. That is a small fraction of the thousands of issues traded throughout the country each day: The New York Stock Exchange has 2,700 stocks; there are 5,193 companies listed on the Nasdaq stock market; the American Stock Exchange has another 773.
Economists argue that the Standard & Poor's 500 stock index may be a better measure of the stock market because it includes more companies. But others are staunch defenders of the Dow, saying it remains the index to watch despite its imperfections.
"There are contentions, complaints and allegations, but for all of its faults, it still fulfills its purpose, and it does it very well," says Laszlo Birinyi, president of Birinyi and Associates, a Greenwich, Conn., financial consulting firm. "It tells you what the market did. It reflects that very well."
