Forget the Dow Jones: Buy This Magnificent ETF Instead
The Dow Jones Transportation Average and the Dow Jones Industrial Average are two of the oldest stock market tracking indexes still in use today. Their longevity shows just how important following market trends is for many investors.
Yet despite their history, those Dow Jones indexes have a few limitations when it comes to the overall market. First and foremost, they only track a handful of companies. The Dow Industrials covers 30 stocks, while the Transports handles 20. Second, by their nature, they are sector-tracking indexes, covering "industrial" and "transportation" type companies respectively, rather than the overall market.
In addition, both are price-weighted indexes whose values are based on the market price per share of each of the companies in the index. That's a bit problematic, as it means that things like stock splits can dramatically shift the impact a company can have on an index that it's a part of.
Source Fool.com
