Why ‘Real America Index’ is a Better Benchmark for Investors

by Jeff Reeves | May 28, 2011 8:24 pm

Real America Index[1]Bad news… That most widely cited measure of the economy and stock market, the venerable Dow Jones Industrial Average, has become a dinosaur. The 115-year-old index is completely disconnected from the lives of every day Americans and the state of the U.S. economy as a whole.

When you think about it, it’s not surprising. Wall Street has a habit of keeping the establishment established while ignoring regular Americans.

While there have been a few dozen reformulations to the Dow over the last hundred years, the patchwork list of 30 current components is a far cry from Charles Dow’s original goal: to measure truly American companies that were influential in truly American industries. Though our current Dow stocks are indeed headquartered in the U.S., many derive a majority of sales from international operations – and a few even employ more folks overseas than the do right here in the states. That’s hardly a way to measure our domestic economic might.

Of course, the other indexes have the same problem. In this global economy, how can you take an accurate pulse of U.S. businesses? When Americans wonder how healthy the nation’s economy is, where can they turn?

At InvestorPlace.com, we hope we have the answer – a list of 50 publicly traded stocks we call the Real America Index.[2]

Here’s how we crafted our uniquely American index:

It was no small task, and there were many debates over the last several weeks as we refined our list and our formula. We hope you will join this discussion and share your comments on each of the individual stock picks for our index – whether you agree or whether you have a better suggestion, we want to hear from you.

Most importantly, we hope that the Real America Index[4] provides a unique perspective into the U.S. economy and the businesses in your local community.

The Dow Jones Industrial Average is a fair measure of the stock market, and we’re not trying to out-do the Dow. But it’s worth noting that Charles Dow didn’t just create an index to watch the market – he founded the Wall Street Journal to inform investors about the news of the day, and created what would come to be known as “Dow Theory” from his observations of economic trends. He was concerned with much more than just stock prices, and we are too.

A farmboy who never finished high school, Charles Dow was a tireless journalist and student of the market who wanted to demystify investing for the people of his era. That’s the same goal we aspire to at InvestorPlace.com, and we hope the Real America Index is one of the many resources you will find helpful as you seek to understand the stock market and the American economy.

Check out the complete list of Real America Index components[5], complete with an interactive map of short-term and long-term returns.

Jeff Reeves is editor of InvestorPlace.com. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.

  1. [Image]: https://investorplace.com/real-america-index/
  2. Real America Index.: https://investorplace.com/real-america-index/
  3. AAPL: http://studio-5.financialcontent.com/investplace/quote?Symbol=AAPL
  4. Real America Index: https://investorplace.com/real-america-index/
  5. Real America Index components: https://investorplace.com/real-america-index/list/

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