Dow Jones Industrial Average (montlily values) 14,000.00 12,000.00 10,000.00 8000.00 6000.00 4000.00 3000.00 2000.00 1500.00 1000.00- 500.00 250.00 12500 62.50 31.25 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Years ndutrial Averng, 190 through 2011 Note that the verical avis uses an exponential sca t essier to se the changes that occurred when the DUIA was low compared with its value todery rement in height this makes i that the vertical axis uses an exponential scale in wt courtesy vaue of Sia the student did not. IHsle, m his own advice, but vested his "about 10 thousand bucks" in the market right away. As it turned out, the market never did fall below 200 in 1951 or any time thereafter. And the student, named Warren Buffet, became a billionaire many times over. QUESTIONS FOR DISCUSSION The stock market is still considered a riskier investment than, say, bank savings accounts or bonds. Nevertheless financial advisors almost universally recommend holding at least some stocks, which is quite different from the situation that prevailed a century ago. What role do you think the DJIA played in building investors' confidence in the stock market? 1. 158 Describing Data Are the Rich The media love to rich, making it seer rest of us are left b If we wish t erage person is fari overall inco ber, called the Gi equality or inequa is defined so that i of 0 indicates perf precisely the sam inequality, in wh one else has anys United States sin to 1968, indicati uniform during ever since, indica me dis 50 1960 1970 1980 1990 2000 2010 Years Note that the vertical axis uses an exponential scale in which the value doubles with eadh hen the DJIA was low compared with its value today. Chart courtesy of StockCharts.com Although 2. The DJIA is only one of many different stock market indices in wide use today. Briefly look up a few other indices, such as the S&P 500, the Russell 2000, and the NASDAQ. How do these indices differ from the DIA? Do you think that any of them should be considered more reliable indicators of the overall market than the DJLA? Why or why not? ber summary of difficult to inte look at the inc which divide th highest quintil 5% of income | 3. The 30 stocks in the DJIA represent a sample of the than 10,000 actively traded stocks, but it is not a randonm sa mple because it is chosen by particular editors for pu ticular reasons that may include personal biases. Sup that you chose a random sample of 30 stocks and their prices. Do you think that such a random samp trac would track the market as well as the stocks in the D Why or why not