VUG - DIA: The Dow Likely Beats The S&P 500 Over The Next Several Years

2024-05-01 01:56:18 ET

Summary

• The article discusses the Dow Jones Industrial Average and its likely performance in the future compared to the S&P 500.
• The major difference is that the S&P is a capitalization-weighted index, while the Dow is managed by a committee that seeks to reflect the U.S. economy with thriving companies.
• Cap weighting prospers as growth companies like Mag 7 dominate the index and increase in size but suffer when this condition unwinds.
• The Dow has often led from 2003 to 2020 and will likely lead again as the popularity of AI and the Mag 7 subside.

It's better to be broadly right than precisely wrong." - Warren Buffett

You wouldn't think the Dow Jones Industrial Average Trust ETF ( DIA ) would be the way to invest these days, would you? While it's still cited in market news about as often as the more comprehensive, statistically sophisticated, and precisely constructed S&P 500, it is seen by many as the last hairy mammoth left over from the Pleistocene Epoch. In fact, it is the last comprehensive large cap index put together by active decision makers, and thus is shaped in a way that is both old-fashioned and oddly up to date. It thus presents an interesting alternative for large cap "blue chip" investors. It has done surprisingly well in this role....

For further details see: