1
00:00:00,440 --> 00:00:03,560
Speaker 1: Get smarter in sixty seconds with brain Stuff from how

2
00:00:03,600 --> 00:00:08,080
Speaker 1: stuffworks dot com. Hi Marshall Brain. If you watch the news,

3
00:00:08,160 --> 00:00:11,560
Speaker 1: you hear all the time about the Dow Jones Industrial

4
00:00:11,640 --> 00:00:14,720
Speaker 1: Average and other averages like the SMP five hundred and

5
00:00:14,720 --> 00:00:19,600
Speaker 1: the Russell two thousand. These are market averages or indexes

6
00:00:19,680 --> 00:00:22,360
Speaker 1: designed to tell you how companies traded on the stock

7
00:00:22,440 --> 00:00:26,720
Speaker 1: market are doing. In general. The down Jones Industrial Average

8
00:00:26,760 --> 00:00:30,680
Speaker 1: is simply the average value of thirty large industrial stocks.

9
00:00:31,200 --> 00:00:34,839
Speaker 1: Big companies like General Motors, Goodyear, IBM, and x in

10
00:00:34,960 --> 00:00:37,639
Speaker 1: are the kinds of companies that make up this index.

11
00:00:38,159 --> 00:00:40,919
Speaker 1: The thing to understand is that the Dow Jones Industrial

12
00:00:41,000 --> 00:00:45,080
Speaker 1: Average is nothing magic. Someone has chosen thirty companies and

13
00:00:45,159 --> 00:00:49,080
Speaker 1: average their values together by following a specific formula. That's

14
00:00:49,120 --> 00:00:52,279
Speaker 1: all it is. There are all sorts of other averages

15
00:00:52,320 --> 00:00:55,440
Speaker 1: out there. The SMP five hundred is the average value

16
00:00:55,480 --> 00:00:59,280
Speaker 1: of five hundred large companies, the Russell two thousand tracks

17
00:00:59,400 --> 00:01:02,920
Speaker 1: the average two thousand smaller companies, and there are many,

18
00:01:02,960 --> 00:01:07,319
Speaker 1: many others. What these averages tell you is the general

19
00:01:07,319 --> 00:01:10,680
Speaker 1: health of stock prices as a whole. If the economy

20
00:01:10,840 --> 00:01:14,200
Speaker 1: is doing well, then the prices of stocks as a

21
00:01:14,240 --> 00:01:18,399
Speaker 1: group tend to rise if it's doing poorly, prices as

22
00:01:18,440 --> 00:01:21,440
Speaker 1: a group tend to fall. The averages show you these

23
00:01:21,480 --> 00:01:25,040
Speaker 1: tendencies in the market as a whole. If a specific

24
00:01:25,120 --> 00:01:27,759
Speaker 1: stock is going down while the market as a whole

25
00:01:27,840 --> 00:01:31,039
Speaker 1: is going up, that tells you something. Or if a

26
00:01:31,120 --> 00:01:34,720
Speaker 1: stock is rising but is rising faster or slower than

27
00:01:34,760 --> 00:01:37,520
Speaker 1: the market as a whole, that tells you something as well.

28
00:01:38,440 --> 00:01:41,320
Speaker 1: Do you have any ideas or suggestions for this podcast?

29
00:01:41,720 --> 00:01:44,360
Speaker 1: If so, please send me an email at podcast at

30
00:01:44,400 --> 00:01:47,120
Speaker 1: how stuff works dot com. For more on this and

31
00:01:47,200 --> 00:01:52,360
Speaker 1: thousands of other topics, go to how stuff works dot com.