We all hear about the Dow Jones Industrial Average (DJIA). It's quoted every day, as in: Where's the Dow? or What's the Dow doing? However, most investors don't realize that the DJIA is only 30 stocks, not nearly as representative of the entire market as a broader index such as the Standard & Poor 500.

So what is the DJIA and which stocks are in it? Below are the current 30 stocks in the index. It has changed over time. And it will again. But right now, these are the "chosen ones". But how did it all begin?

The Index started in 1884 with stocks chosen by Charles Dow, one of the founders of Dow Jones & Co., publishers of The Wall Street Journal and Barron's. He picked 11 stocks, mostly railroads, because they were well capitalized and liquid. But it wasn't until May 26, 1896 that the first Dow Jones Industrial Average was published. By then the index included all 12 of the industrial companies listed on the New York Stock Exchange. The industrials were gaining in size on the railroads. Only 1 of the original stocks in the DJIA remains today. It's General Electric.

The stocks in the index are chosen by people employed by Dow Jones & Co. It is their arbitrary opinion that puts a company in or takes one out. All companies are still very large, often seen as leaders in their fields.

There are several flaws in the DJIA. First, it is price weighted so that stocks with high prices move the index more than lower priced stocks. Second, the stocks don't represent each sector of the market. Also, there are only 30 stocks. A better index would have many more stocks. Third, the index doesn't accurately reflect the total return of the stocks in it. Dividends are not part of the return calculation. Only price movement.

One of the positive attributes of the DJIA is that it illustrates the volatility even large companies endure. Here are few data points: In October of 1927, the DJIA was at 239.43. By September of 1929, it was 380.33 (up 58.8%). In June of 1932, the index sat at 42.84 (down 88%). It didn't reach a new all-time high until November of 1954. It hit its best price on April 7, 2008 when it closed at 14,164. There was an intraday high of 14198 on October 11, 2007, but it didn't close there.

So what are the current members of the Index?

3M (MMM)
Alcoa (AA)
American Express Co. (AXP)
A T & T Inc. (T)
Bank of America Corp. (BAC)
Boeing Co. (BA)
Caterpillar Inc. (CAT)
Chevron Corp. (CHV)
Cisco Systems Inc. (CSCO)
Coca Cola Co. (KO)
E. I. Du Pont De Nemours And Co. (DD)
Exxon Mobil Corp. (XOM)
General Electric Co. (GE)
Hewlett Packard Co. (HPQ)
Home Depot Inc. (HD)
Intel Corp. (INTC)
International Business Machines Co. (IBM)
Johnson & Johnson (JNJ)
JP Morgan Chase and Co. (JPM)
Kraft Foods Inc. (KFT)
McDonalds Corp. (MCD)
Merck & Co. Inc. (MRK)
Microsoft Corp. (MSFT)
Pfizer Inc. (PFE)
Procter & Gamble Co. (PG)
Travelers Companies Inc. (TRV)
United Technologies Corp. (UTX)
Verizon Communications Inc. (VZ)
Wal-Mart Stores Inc. (WMT)
Walt Disney Co. (DIS)

Each week, I will dedicate a column to each of the stocks in the DJIA so our readers will know a little more about the index. Please click here to read the latest on Wal-Mart Stores. 

Week 1: Chevron
Week 2: 3M
Week 3: Alcoa
Week 4: American Express
Week 5: A T & T
Week 6: Bank of America
Week 7: Boeing
Week 8: Caterpillar Inc.
Week 9: Cisco Systems Inc.
Week 10: Coca Cola
Week 11: Du Pont
Week 12: Exxon Mobil 
Week 13: General Electric Co.
Week 14: Hewlett Packard Co
Week 15: Home Depot Inc
Week 16: Intel Corp.
Week 17: International Business Machines Co.
Week 18: Johnson & Johnson
Week 19: JP Morgan Chase and Co.
Week 20: Kraft
Week 21: McDonalds Corp.
Week 22: Merck & Co. Inc
Week 23: Microsoft Corp
Week 24: Pfizer Inc.
Week 25: Procter & Gamble 
Week 26: Travelers Companies
Week 27: United Technologies Corp.
Week 28: Verizon Communications Inc.  
Week 29: Wal-Mart Stores

 Ted Allrich