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overpower more well-established stocks. The good news is that you don’t have to come up with such a benchmark. Benchmarks already exist, and they are known as market indices.

By far the most well-known and popular benchmark or index used for the stock market is the Dow Jones Industrial Average (a.k.a. DJIA, Dow Jones, or just plain Dow, not to be confused with the company Dow Chemical). The Dow Jones Industrial Average is published by Dow Jones (well known for its Wall Street Journal newspaper). The DJIA was first calculated and published in 1896 using 12 stocks with an initial value of 40.74. Among the 12 stocks that comprised the list were American Cotton Oil, American Sugar, American Tobacco, National Lead, and General Electric (founded by Thomas Edison). Today 30 stocks comprise this list, and of the original 12, only General Electric has survived. Over time the publishers of DJIA have switched companies in the list in an attempt to correctly represent the stock market as a whole. For example, Intel and Microsoft recently entered the list representing technology stocks, which have gained immense popularity in the past two decades. The list as of this writing includes: …