The Dow Jones Is a Broken Compass. Watch This Instead.

I remember sitting in front of the TV as a kid in the Netherlands, watching the evening news with my dad. He would have a beer, I would have a glass of milk, and every single night the presenter would announce whether the Dow Jones was up or down. I had no idea what it was. But I assumed it was the heartbeat of the world economy. Dow green, we are winning. Dow red, trouble ahead.

I am not the only one who grew up thinking that. When people in power want to prove the economy is great, they point to the Dow. But if you are using the Dow Jones to measure your financial health, you are looking at a broken compass.

It is not a reflection of “the market”. It is a list of just 30 companies, hand-picked by a small committee for reasons they do not fully disclose. They swap companies in and out whenever they feel like it. Imagine trying to judge the health of a forest by looking at 30 specific trees that someone chose because they liked the look of them.

It gets worse. The Dow is “price-weighted”, which means the index moves based on the share price of a single stock. A company with a 500 dollar share price has ten times more influence than one priced at 50, even if the cheaper company is actually bigger and more important. It is a random, outdated method that belongs in the 19th century. Because it is from the 19th century.

Most modern indexes are “market-cap weighted”. The bigger the company, the more it matters. That makes sense. The Dow does not. Politicians and news anchors love it because the numbers are big and they move fast. Great for headlines. But it tells you almost nothing about the actual strength of the global economy, and absolutely nothing about your personal wealth.

So what should you actually watch? The MSCI World. It tracks thousands of companies across 23 developed countries. If you want a genuine picture of how the world economy is performing, that is your number. Not 30 hand-picked American stocks from the 1800s.

Just because something is repeated every night on the news does not mean it is worth listening to. Something to think about: what else do you believe to be true about money simply because you have heard it your whole life?

If you are tired of watching the wrong numbers, here is a short video on what I actually do: https://go.bamillionaire.com/watch-now. Or if you are ready, book a call: https://go.bamillionaire.com/apply

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