Uh assuming you are serious the parent poster obviously understands this. The point is that it is absurd to have an index where if the total market cap of the tracked companies goes down, the index can go up. This has nothing to do with the returns of buying or selling any particular stock.
One way of looking at the DJIA - If you place $1000 into each of the companies underlying it, the DJIA will reflect your gain/loss in investment. If you tried to weight the index based on the underlying market cap of each of the companies, you wouldn't get a correct assessment of the value of your investment.
Comments
if you buy caterpillar at $80 and sell at $85 you've made 6.25% gain, whereas if you buy exxon mobil at $86 and sell at $91 you've made 5.81% gain.
Even though one is a change (to run with your numbers) of $3.3 billion and the other of $20.95 billion. it's just how shares work.
This is true regardless of how many shares you bought, and regardless of how many shares were outstanding[1] or the company's market caps.
[1] obv other than new issues/splits/etc.
Uh assuming you are serious the parent poster obviously understands this. The point is that it is absurd to have an index where if the total market cap of the tracked companies goes down, the index can go up. This has nothing to do with the returns of buying or selling any particular stock.
One way of looking at the DJIA - If you place $1000 into each of the companies underlying it, the DJIA will reflect your gain/loss in investment. If you tried to weight the index based on the underlying market cap of each of the companies, you wouldn't get a correct assessment of the value of your investment.