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Compare and contrast the Dow Jones Industrial Average (DJIA) and the S&P 500. Decide which one...

Compare and contrast the Dow Jones Industrial Average (DJIA) and the S&P 500. Decide which one you think is a better barometer for a market portfolio based on one of the following portfolio objectives:

  • Growth
  • Income
  • Capital preservation
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Answer #1

Growth - S&P 500 since Since it represents the 500 stocks and 80% of the american equity market. It is broad market and hence is best suited for growth

Income - Dow Jones (DJIA) since it consists of large, mature and most established US business which are stable and give stable income in the form of dividends

Capital Preservation - Dow Jones (DJIA) since it consists of the largest 30 business by market capitlization and these would be more stable in case of a downturn

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