Is the Dow Jones Index Obsolete?

American companies have gone global in a big way, and stellar earnings from investments in global equity markets in recent years has left only in the U.S., investors green with envy.

But what is still the most widely quoted market indicator in newspapers, on television and the Internet - the Dow Jones Industrial Index (DJIA).

Let's take a quick look at the history of this index, why it may be out of date and provide an alternative - a new ETF portfolio and index sponsorship, we are sure the titleChartwell Global 30 index.

Charles Dow created in 1896, the first Dow Jones index that nine railroad stocks, a steamship line and a communications company added. In 1916, the industrial average expanded to 20 shares, the number was raised again, in 1928 to 30, where it remains.

Charles Dow had the vision, a scale, the overall market situation and therefore the project would help provide investors confused by fractional changes to U.S. dollars. A revolutionary idea to be hisImplementation was simple. The averages were, well, good old average. In order to calculate the first average, Dow, stock prices and divided by eleven, the number of shares included in the index. A special divisor other than the number of shares will be used to avoid distortions when constituent companies their share split, or when a stock is replaced for another.

Today, the DJIA is a benchmark that tracks that U.S. stocks are considered the leaders of the economy andlisted on the NASDAQ and NYSE. The DJIA covers 30 large cap companies, which are subjectively picked by the editors of the Wall Street Journal. Over the years, the companies were amended in the index to ensure the index remains in its current policies of the U.S. economy. In contain fact, the first companies, only General Electric remains as part of today's average.

The latest cuts were as Kodak, International Paper, and AT & T, Pfizer, AIG has been replaced,and Verizon. A few years ago, the Dow overseer history by the first two stocks not listed on the New York Stock Exchange, but the Nasdaq: Microsoft and Intel. Since 1959, other companies include Disney, Wal-Mart, McDonald's and Home Depot.

You can imagine that the S & P 500 Index, the DJIA has overtaken popular. However, over long distances, the Dow 30 and the S & P 500 correlated closely. The S & P 500 Index is a market capitalization weighted and an unhealthyConcentration in the largest stocks.

In addition, have developed as the relation between these two, the S & P was the more volatile, with higher highs and lows. Since January 2000 the Dow was the steepest decline of 30 percent, while the S & P was 500 at 40 percent. S & P were also investors, at this point for the additional risk that offsets the volatility bound. Since these two indices will be written are still conducted under the January 2000, but the Dow's loss is milder.

Since the DJIAis only U.S. companies and, by definition, meet at the industry is concentrated, it is not exactly the performance of large parts of the U.S. or global market. There are many good companies in the DJIA but it is no longer a good barometer of the U.S. economy or the typical American portfolio nor a useful index for investment vehicles to pursue.
What if there is a global alternative to the Dow Jones Industrial Average - one that is always in its simplicity with30 companies are equally weighted - but also caught more international growth opportunities?

The Chartwell Global 30 is that alternative and was designed to provide investors with a much better option than the Dow Jones Industrial Index. The portfolio comprises thirty multinational companies from a universe of the one hundred largest companies selected in the world - the S & P Global 100 Index - and equally divided between the American and foreign companies will be equally weighted and re-balanced annually.

TheThe following factors determine which of the managers of global companies Chartwell be elected 30th First, the economic situation of the company, its competitive advantages and quality of management is assessed and evaluated. Second, the relative valuation of the company is based on factors such as price-book designed to cash flow multiple, price-to-sales, price-earnings and price / cash flow.

Since the Chartwell Global 30 was formed in April 2005, it has decisively beaten the Dowincluding dividends.
Since 1 April 2005: Chartwell Global 30, 59.1%, Dow, 40.3%
In the last 12 months: Chartwell Global 30, +30.3%, Dow, 21.7%
2007 years-to-date by 1 October: Chartwell Global 30, + 21.2%, Dow, 13.5%

The Dow Jones Industrial Average was revolutionary at the beginning and has a well-deserved storied past that the development of the American economy parallels. For the period of the global economy and the investor, it's time for a new revolution.