Dow Jones nearing an all-time high. So what?

The Dow is a silly index for silly people. Pay no heed.

Today could be the day the Dow Jones Industrial Average hits its highest ever mark. And it won't mean a thing.

The DJIA—commonly referred to as just the "Dow"—is one of the most important stock market indexes in America. With the S&P 500 and Nasdaq, it's a useful proxy for the health of American business. When the Dow's up, times are good; when it's down, hold on to your hats.

Later today, it's expected that the Dow will break 14,164.53, the all-time high reached on Oct 9, 2007. It closed at 14,127.82 yesterday, and a slew of "good" reports from Europe—where French, German and UK PMIs came in higher than expected, albeit still signalling contraction for the former—as well as futures contracts due to vest today indicate that nows the time it will break that barrier.

But even if it does, it's a meaningless milestone. Due to the way the Dow is put together, the two marks aren't comparable. So while you will read stories about how "the American market has recovered", they may or may not be true—and this says nothing either way.

Adam Nash describes the problem:

Just thirty stocks, hand picked by committee by Dow Jones, with no rigorous requirements. Worse, it’s a “price-weighted” index, which is mathematically nonsensical. When calculating the Dow Jones Industrial Average, they take the actual stock prices of each stock, add them together, and divide them by a “Dow Divisor“. They don’t take into account how many shares outstanding; they don’t assess the market capitalization of each company. When a stock splits, they actually change the divisor for the whole index. It’s completely unclear what this index is designed to measure, other than financial illiteracy.

In fact, there is only one justification for the Dow Jones Industrial Average being calculated this way. Dow Jones explains it in this post on why Apple & Google are not included in the index. To save you some time, I’ll summarize: they have always done it this way, and if they change it, then they won’t be able to compare today’s nonsensical index to the nonsensical index from the last 100+ years.

The end result is that, as Nash points out, the Dow is only "off its highs" of 2007 because of it made one arbitrary decision rather than another. If Apple had been introduced to the index in 2009 rather than Cisco, the Dow would have broken its high well over a year ago. It would have been nonsensical to report that then; and it's still nonsensical to care now.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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How the Lib Dems learned to love all-women shortlists

Yes, the sitting Lib Dem MPs are mostly white, middle-aged middle class men. But the party's not taking any chances. 

I can’t tell you who’ll be the Lib Dem candidate in Southport on 8 June, but I do know one thing about them. As they’re replacing a sitting Lib Dem (John Pugh is retiring) - they’ll be female.

The same is true in many of our top 20 target seats, including places like Lewes (Kelly-Marie Blundell), Yeovil (Daisy Benson), Thornbury and Yate (Clare Young), and Sutton and Cheam (Amna Ahmad). There was air punching in Lib Dem offices all over the country on Tuesday when it was announced Jo Swinson was standing again in East Dunbartonshire.

And while every current Lib Dem constituency MP will get showered with love and attention in the campaign, one will get rather more attention than most - it’s no coincidence that Tim Farron’s first stop of the campaign was in Richmond Park, standing side by side with Sarah Olney.

How so?

Because the party membership took a long look at itself after the 2015 election - and a rather longer look at the eight white, middle-aged middle class men (sorry chaps) who now formed the Parliamentary party and said - "we’ve really got to sort this out".

And so after decades of prevarication, we put a policy in place to deliberately increase the diversity of candidates.

Quietly, over the last two years, the Liberal Democrats have been putting candidates into place in key target constituencies . There were more than 300 in total before this week’s general election call, and many of them have been there for a year or more. And they’ve been selected under new procedures adopted at Lib Dem Spring Conference in 2016, designed to deliberately promote the diversity of candidates in winnable seats

This includes mandating all-women shortlists when selecting candidates who are replacing sitting MPs, similar rules in our strongest electoral regions. In our top 10 per cent of constituencies, there is a requirement that at least two candidates are shortlisted from underrepresented groups on every list. We became the first party to reserve spaces on the shortlists of winnable seats for underrepresented candidates including women, BAME, LGBT+ and disabled candidates

It’s not going to be perfect - the hugely welcome return of Lib Dem grandees like Vince Cable, Ed Davey and Julian Huppert to their old stomping grounds will strengthen the party but not our gender imbalance. But excluding those former MPs coming back to the fray, every top 20 target constituency bar one has to date selected a female candidate.

Equality (together with liberty and community) is one of the three key values framed in the preamble to the Lib Dem constitution. It’s a relief that after this election, the Liberal Democratic party in the Commons will reflect that aspiration rather better than it has done in the past.

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

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