Charles Dow was the guru behind this Wall Street standard of indexing securities. He was born in Sterling, CT on November 6, 1851. That birth date marks Dow as a Scorpio; if you put any credence into astrology, it would explain why Dow seemed obsessive-compulsive, "bull"-headed, and driven to succeed.

Dow was a farm boy who never finished high school. The lack of schooling didn't impede his education. He learned to read and write well enough to work for the Springfield Daily Republican newspaper in Massachusetts when he was 21. Dow covered the city beat for the Republican for four years, then left to work as night editor for The Providence Star in Rhode Island. The Star went out of business two years later, so Dow migrated to The Providence Journal. At the Journal, he became known as a historian -- an expert on the steamship and on local Providence past.

Did I mention Scorpios were resourceful and inventive? Dow proved these attributes when the Journal sent him to Leadville, CO in 1879 to cover the discovery of carbonates. Dow became interested in the financial aspects of this event, and he deduced he was a whiz at financial reporting. By 1890, the Journal lost their historian and Wall Street gained an expert in financial analysis.

Edward D. Jones (not affiliated with the current Edward D. Jones Company) was working in NYC at The Kieman News Agency at the time. He had known Dow in Providence, so Dow used this affiliation to obtain a reporting position at Kieman. After two years, Dow and Jones left Kieman to form their own company, named Dow Jones & Company. Scorpios have a bit of an ego, so Dow's name coming first on the title is no surprise. I'm sure he couched the approach to this decision by stating it would only be fair to name the company in alphabetical order.

To prove my theory, another man by the name of Charles Bergstresser was involved in this new venture. Needless to say, he was a silent partner -- probably because his name started with a "B," putting him ahead of "D" for Dow. If you want to know more about this trio and their personalities, you can read Brian Trumbore's article, "Dow Jones Bergstresser Industrial Average" here at BUYandHOLD.

Wall St. took a fancy to Dow, trusting his viewpoints and his demeanor (most folks don't trust a reporter, but Scorpios are usually very charismatic). Dow initially located the company at 15 Wall Street, next door to the NYSE. They worked in the back room of a soda fountain, a situation providing Dow with plenty of traffic for financial news and gossip.

Beginning in 1884, Dow Jones & Company printed a daily news sheet, which was the precursor to the Wall Street Journal (WSJ). Named The Customer's Afternoon Letter, this vehicle published Dow's first American stock averages that year. The list consisted of seven companies, which grew to a list of twelve railroads and two industrials the following year.

In 1891, Dow was forty years old. He became editor of the WSJ upon its birth in 1889. He also spent the better part of six years on the floor of the NYSE buying and selling stocks. He probably slept in the back room of that soda fountain as well, providing the reason for the lack of a phone until a year after Dow left the floor of the NYSE.

Five years later - in 1896 - Dow published his original industrial average index separate from the railroad listing. This hand picked list - the "Dow Dozen" - was a widely diversified portfolio, and it was a remarkable feat. At the time, Wall Street investors didn't have a clear, concise methodology to divine averages in any stock exchange. This list was devised during the time of the Klondike Gold Rush and the Spanish American War; it was a wild time in America. Since Dow had a reputation for trustworthy reporting, investors took his "theories" to heart, making him the guru of Wall Street.

Most Scorpios aspire to guru status.

Today, the DJIA consists of thirty companies selected by the editors of the Wall Street Journal. The stocks are leading companies in their respective industries and are widely held by investors. This allows the list to act as an indicator of performance over a broad spectrum of industries, excluding transportation and utilities. The latter two industries have their own averages, also selected by the editors of the WSJ. Any company meeting the standards of the Dow methodology might be listed, without regard to their exchange listing.

Mr. Dow would probably be quite pleased over his company's growth since his death. The DJIA is only the best known of over 3,000 international indexes, including the Dow Jones Blue-Chip, Benchmark, and Specialty Indexes. Dow Jones still publishes the WSJ, as well as Barron's and SmartMoney magazines and other periodicals, the Dow Jones Newswires, and the Ottaway group of community newspapers. Dow Jones is co-owner with Reuters Group of Factiva (another news source), and with NBC of the CNBC television operations in Europe and Asia. They also provide news content to CNBC in the states.

Charles Dow was too busy to understand the depth of his own work. The Dow Theory was developed after his death. This theory constitutes the Bull and Bear market benchmarks as we know them today. If you would like to learn more about the Dow Theory and the history of the Dow and the Wall Street Journal during the 1900s, you can visit the Dow Jones Web site.

As a fellow Scorpion, I can appreciate Charles Dow's drive and vision. However, I have a gut feeling none of my theories will ever garner riches or fame, even after my demise. I had one great idea when I had my daughter, and she's all the riches I need (outside of a great portfolio at BUYandHOLD).

Did I mention Scorpios were great schmoozers?

Until Next Week,
Linda Goin