How Legendary Traders Made Millions: Profiting from the Investment Strategies of the Greatest Stock Greatest Traders of All Time by John Boik

1
Industrial Stocks
Produce a Millionaire
(1897-1909)
Bernard Baruch Considered the Action of the Market
When Making His Plans

Charles Dow was actually a journalist. He was a financial writer who wrote
articles for the Express and New York Mail concerning financial statistics.
Eventually, he teamed up with a fellow worker, and they decided to strike out
on their own. The two formed their own firm, and Charles Dow together with

ellow worker Edward Jones created a company called Dow, Jones and Com-

pany. On July 8, 1889, the company introduced a new product: the first edition
of the Wall Street Journal was printed with Dow acting as editor and founder.
Charles Dow later created the Dow Average to help relieve the confusion
that the numerous daily fluctuations in the market presented to many people
as interest in the stock market began to grow. Dow wanted to create an index
that would give an overall picture of what the market was actually doing in a
summarized statistic. This average, or statistic, would provide a window, to
the many that were following the market, into the activity of the overall mar-

ket instead of just looking at the numerous changes in each stock and trying
to interpret what the market in general was doing. Dow started this original
average index in 1884 with 11 stocks, which were mostly made up of railroad
stocks, the dominant industry of that time. In 1896, Dow introduced the
Dow Industrial Average, and in October of 1896 the original and official aver-

age that he created in 1884 became known as the 20 stock railroad average.
The newly formed Dow Industrial Average, which consisted of 12 leading
stocks, now provided the general public with a reliable statistic that would
tend to mirror the general activities of the overall market. The original stocks
chosen for the index were

American Cotton Oil Chicago Gas Distilling & Cattle Feeding
American Sugar Refining Laclede Gas National Lead
General Electric U.S. Rubber North American
Tennessee Coal & Iron U.S. Leather pfd. American Tobacco

These companies represented the industrial age of the coming 20th cen-

tury. Throughout the decades to come the average would be expanded to 30
stocks and new leading stocks of new eras would replace older leaders over
time. The only stock from the original average that is still present in the aver-

age today is General Electric. The first recorded average stood at 40.94. The
current list of the Dow Jones Industrial Average stocks, as of this writing,
now consists of stocks representing many different industries.
Baruch Makes His Mark
With the newly adopted Dow Industrial Average for measuring the overall
performance of the market in place, stock operators could better gauge the

How Legendary Traders Made Millions: Profiting from the Investment Strategies of the Greatest Stock Greatest Traders of All Time by John Boik