What we own part 1 - Oct 29

Today, I will answer your questions concerning my statement: “Wall Street makes its money with us being in the market. We make our money with what we own and when.”

To help answer, I designed a performance chart of the Dow Industrials Index ($INDU) and four main DOW companies — ExxonMobil (XOM), Verizon Communications Inc.(VZ), Walt Disney Co. (DIS), and International Business Machines (IBM). Plus, I included the main Dow Exchange Traded Fund, (DIA).

Per my chart, the 2017 year-to-date performance of the Dow Industrials is 18.62 percent, and DIA is 20.74 percent. The four featured Dow companies and their performance; IBM (-3.41 percent), Disney (-4.99 percent), Verizon (-3.87 percent), and ExxonMobil (-4.88 percent).

No one knows which stocks will outperform or underperform any index. One could have been in either of these four Dow companies and would have lost while the Dow is having a very profitable year.

Many investors only look at the index returns and assume their funds are doing as well — which could be a very costly mistake.

Here’s what you need to think about:

First, do you know which index your stocks are in?

Second, if so do you know how your index is performing?

Third, are you tracking your holdings to monitor their performance?

Fourth, if not, why?

Remember — Wall Street makes its money with us being in the market. We make our money with what we own and when.

Of course, there are Dow stocks that are outperforming the index and I will cover those next week.

Plan your work, work your plan, and share your harvest!

DAVID O. ENGLAND is the founder of the Eye on the Market-Training Academy (Davidoengland.com) and Associate Professor Emeritus of Finance. This column is for educational purposes only and not intended as financial advice. Your decision to buy, sell, short or hold any investment product is a direct result of your decisions, free will, and research. For questions-send to thetraderseye@gmail.com.

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