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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The government has quietly shut the door on vulnerable child refugees

The government has tried to halt the Dubs Amendment, a scheme designed to save thousands of vulnerable child refugees.  

The "Dubs Amendment" to the Immigration Bill of last year, in which the government begrudgingly promised to accept 3,000 unaccompanied child refugees from other countries in Europe, was halted this month after only 350 children had been admitted.

It has since become absolutely clear that the government is wriggling out of its obligation to accept child refugees, shutting the door on the most vulnerable. 

The amendment was named after my Labour colleague in the House of Lords. Alfred Dubs, who grew up in Britain and was saved from the hands of the German Nazi regime by Nicholas Winton, who rescued 669 children virtually single-handedly from Czechoslovakia.

The decision – announced at a time when the media was mainly concentrating on Brexit - has since been the source of much outcry both within Parliament and beyond. People across Britain are clear that the government must end these efforts to prevent refugees arriving here, and this is not who we as a society are.

Labour simply cannot accept the government’s decision, which seems to breach the spirit of the law passed with cross-party support. I have challenged Home Secretary Amber Rudd on the issue. 

The government's actions have also been criticised by Yvette Cooper, who heads Labour’s refugee task force and the Home Affairs select committee, the Archbishop of Canterbury, Justin Welby, and Scotland’s First Minister, Nicola Sturgeon, who called it “a clear dereliction of the UK’s moral and global duty”. 

Then at the recent Bafta awards, a number of those in attendance including the actor Viggo Mortensen, also wore lapel badges reading “Dubs now”.

And we have seen more than 200 high-profile public figures including Ralph Fiennes, Keira Knightley, Sir Mark Rylance, Gary Lineker, Michael Morpurgo and the band Coldplay write to Theresa May calling on her government not to close the scheme, decrying the decision as “truly shameful” and adding that “the country we know and love is better than this". 

As the letter states, it is embarrassing, that this government cannot match even Winton’s total. As his own daughter put it in her letter to the Prime Minister, “I know we can’t take in every unaccompanied child in Europe, but I suppose there was a sense when the government accepted the Dubs Amendment that they would make a bigger contribution than they have.”

We need to be clear that where safe and legal routes are blocked for these children, they are left with a terrible choice between train tracks on the one hand, and people traffickers on the other. These children have been identified as the most vulnerable in the world, including girls without parents, who are susceptible to sex traffickers.

The government’s decision is particularly disappointing in that we know that many local authorities across Britain, which assume responsibility for the children once they are admitted to the country, are willing to accept more refugees.

Yet the public outcry shows we can still force a change.

Interestingly, former Conservative minister Nicky Morgan has argued that: “Britain has always been a global, outward-facing country as well as being compassionate to those who need our help most. The Conservative party now needs to demonstrate that combination in our approach to issues such as the Dubs children.”

Let’s keep the pressure up on this vital issue. The internationally agreed principles and the Dubs Amendment were never conceived as a “one-off” - they should continue to commit to meeting their international treaty obligations and our own laws.

And on our part, Labour commits to meeting the obligations of the Dubs Amendment. We will restore the scheme and accept some of the most vulnerable children in the world.

 

Diane Abbott is Labour MP for Hackney North and Stoke Newington, and shadow home secretary. She was previously shadow secretary for health.