re: Ominous sign for Wall St./Alpha
Hi there Alpha,
Having just bottled the last of our 40 gallon Brown Brothers tawny port which some friends and I acquired back in 1975 (thanks to EG Whitlam introducing a tax for vineyards that stored wines on site), I'm stung to reply to your last post. You made an excellent analogy which you then went on to completely misinterpret.
Our port has operated on the Solero system which I believe is also used to make sherries. Basically every few years, we have taken out 10 gallons for bottling and replaced that port with a fresh 10 gallons purchased from the vineyard. what comes out each couple of years is still excellent port...just that...
I contend that the DOW is just the same. An index that allows us to compare the performance of companies that have satisfied certain criteria. Surely you can't have an index that contains companies that are defunct. The dow compares apples with apples just as do the new ASX indices on which I see today, my beloved OXR has been admitted to the 200 or some such...
I accept that the DOW is perhaps not as useful an index as the S&P 500, Witshire or some of the others since it covers fewer shares but it gives us more or less the same information. You have only to look at charts of all the indices over long periods of time to see that. The DOW just specialises in a certain level of capitalised stock. Don't forget also that there is not just one DOW index ie the industrials but also the Transports and the basic tenet of Dow Theory is built on looking at the relative movements of BOTH indices.
Why get rid of one useful tool in an arsenal of tools?
By the way, adopting the policy of our Great and Fearless Friend, I will neither confirm nor deny that I am spunkyblonde as you had the temerity to suggest the other day!!
with warm affection, AnnaP
"When a component stock fails it is replaced with something else so over time it is similiar to a tawny port - just an ongoing blending exercise and only a good reflection of the immediate period.
