The Wall Street Journal and the Dow Jones Company were founded by American journalist Charles Henry Dow. Charles Dow discovered the Dow Jones Industrial Index while analyzing market movements. He also popularized the Dow Theory, which describes how stocks and stock markets move.
A farming family welcomed Charles Henry Dow into the world on November 5, 1851 in Connecticut. At the age of 21, Dow decided to pursue journalism instead of carrying on his family’s business and started working for the Springfield Daily Republician newspaper in Massachusetts. He started contributing economic articles to the Providence Journal in 1877. In 1880, Dow relocated to New York and started writing business news. Edward Davis Jones and Dow started working for the same newspaper there when Dow started. Jones’ success in examining financial reports and his desire to produce objective news impressed him. The two agreed that the New York Wall Street stock market required a new economic news organization. To address this need, they teamed up to establish the Dow Jones Company in 1982. The agency’s correspondents visited banks, businesses, and brokers and sent the news they gathered to the corporate office. The office then shared the reports it produced as a result of this information with Wall Street. Based on the stock prices of nine railroad companies and Western Union banks that were traded at the time on the Wall Street exchange, the company also created an index known as the Dow Jones Index. The company established The Wall Street Journal in 1889 with the intention of publishing the data and economic news it gathered on a daily basis through a newspaper. Due to worsening health issues, Charles Dow was forced to sell his stock in the corporation and the newspaper in 1902. On December 4, 1902, Charles Dow passed away.
The Dow Theory, which was developed after Charles Dow’s passing, is equally as significant as the Dow Jones stock market index, which is still being calculated by The Wall Street Journal and is still published today.
Six guiding principles for stock market movement make up the Dow Theory. These:
1) In stock markets, there are three fundamental movements. The medium-term movement, which spans a period of ten days to three months, and the short-term movement, which spans a period of several days to one month, are the main movements covering a period of three months and longer.
2) There are three phases to each movement period. The majority of investors do not want to buy because stock prices are low in the initial stage. At this point, the market begins to move as a number of investors begin to buy, believing that the prices are appropriate. As a result of other investors buying stocks after seeing these purchases, prices gradually increase. Investors who purchased at lower prices in the initial stage begin to sell the shares they purchased during this time when demand is high due to the majority’s desire to purchase stocks. The situation halts the price increase, and other investors see this and begin to panic-sell their shares. The third stage is this one. At the conclusion of this stage, prices once more decline significantly, and the first stage’s beginning is reached.
3) All of the news and expectations are reflected in share prices at any given time. As a result, the markets will react to price it in the event of fresh information or news.
4) Indices ought to complement one another. The stock exchange-traded sector indices that can influence one another should complement one another. For instance, while shares of automakers are increasing, the value of shares of companies that make auto tires is declining. Since there is a contradiction here, these shares shouldn’t be purchased.
5) Volume ought to reinforce the trend. The point being made here is that a stock should experience an increase in trading volume during an uptrend and a decrease in trading volume during a downtrend.
6) Upward or downward motions continue unless specific signals are received. What is meant by this is that if a stock’s long-term movement is upward, any short-term downward movements may not matter because the stock will eventually follow this trend and increase in price. The decline holds true in the same way. It takes a lot of different analyses to determine when a long-term movement will come to an end.
Dow After Charles Dow’s passing, a theory was created, and it is still utilized today in stock portfolio management. The theory serves as the foundation for today’s technical analysis of stocks.
The father of unbiased economic and financial reporting is regarded as Charles Dow. Dow has made an effort to write economic news in terms that the general public can understand. His works 2 He oversaw the first century’s economic journalism.