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The Unsung Hero of Dow Jones

A common mistake many investors make is to just look at the Index to see the performance of the Market - the risk is that you will lose many good investment opportunity as Index does not always reflect true picture of the market.

 
Here is the example of Dow Index:The Index is down 3% from its 10 year levels and is down 10% from its level 1 year ago but still you had a stock like Travelers Cos which has been best performing stock in Dow Jones over the same period giving you an impressive return of 133% over 10 year period & impressive 40% over a year period.
 

While the worst performing are the big names like Alcoa, Bank of America and General Electric.
 

One last observation, despite such impressive gains in the stock price of Travelers the Dow still fell, that is because it just has .30 weight in the Index. The Dow was down because the stocks with high weight Microsoft, GE, P&G, Pfizer and BOA has not done well.


Moral of the story - never just look at the Index for analysis - dig down deepto see who is dragging the Index up and who is Pulling the Index Up.

Disclosure: No positions in any of the stocks listed above'