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How does this work? [Dow Jones up, but Vanguard Total Stock down]

Posted: Fri Jul 28, 2017 6:30 pm
by bjames310
The Dow Jones is at record highs with three straight days of gain, yet VTSAX has been down three days in a row. I'm confused.

Re: How does this work?

Posted: Fri Jul 28, 2017 6:37 pm
by mcraepat9
bjames310 wrote:The Dow Jones is at record highs with three straight days of gain, yet VTSAX has been down three days in a row. I'm confused.
DJIA is not the same thing as VTSAX.

Re: How does this work?

Posted: Fri Jul 28, 2017 6:40 pm
by Thesaints
bjames310 wrote:The Dow Jones is at record highs with three straight days of gain, yet VTSAX has been down three days in a row. I'm confused.
The "dow jones" is composed of 30 equally weighted companies. The TSA is made of ~5000, capitalization weighted.

Re: How does this work?

Posted: Fri Jul 28, 2017 6:41 pm
by delamer
The fund is the total US stock market, while the Dow has 30 stocks.

Re: How does this work?

Posted: Fri Jul 28, 2017 7:26 pm
by arcticpineapplecorp.
Thesaints wrote:
bjames310 wrote:The Dow Jones is at record highs with three straight days of gain, yet VTSAX has been down three days in a row. I'm confused.
The "dow jones" is composed of 30 equally weighted companies. The TSA is made of ~5000, capitalization weighted.
A few corrections are in order:

First, the TSA (does that stand for total Stock Admiral? Most here when they abreviate use TSM for total stock market) doesn't have "~5000" companies. It has 3606 companies. Don't believe me, see so for yourself: https://personal.vanguard.com/us/funds/ ... IntExt=INT. Still 3606 is more than 30 companies (in the Dow) so it's more diversified.

Second, the Dow Jones is not equally weighted companies, but rather, price weighted. Don't believe me, see here: https://www.google.com/search?q=is+the+ ... 8&oe=utf-8
Is the Dow Jones cap weighted?
For example, if a company's market capitalization is $1 million and the market capitalization of all stocks in the index is $100 million, then the company would be worth 1% of the index. The alternative to weighting by market cap is a price-weighted index such as the Dow Jones Industrial Average. source: https://www.google.com/search?q=is+the+ ... 8&oe=utf-8
That being said, you can get an equal weighted Dow Jones Index here (ticker: DJIEW):
https://us.spindices.com/indices/equity ... ight-index

Third, and not yet mentioned, the Dow is only comprised of large cap stocks, whereas the total stock market index fund is mostly large cap stocks (around 80% of the market) but also includes the mid cap and small cap stocks (the other 20% of the market). So it's also more diversified than the Dow in this regard.

Now that you know they're not the same, do you want to invest in 30 price weighted (or equally weighted) large cap only companies or 3606 market cap weighted companies including large, mid and small caps? If you still prefer the former because of a three day track record that has beaten the total stock market index fund then consider:
An exchange-traded fund is designed to track the results of a specific index. One ETF, the SPDR Dow Jones Industrial Average ETF (stock symbol DIA), directly tracks the DJIA. This ETF hold shares of the DJIA stocks in the same proportion as tracked by the Industrials stock index. source: https://www.google.com/search?q=invest+ ... 8&oe=utf-8
However, realize that a three day track record does not a better fund make.

Re: How does this work?

Posted: Fri Jul 28, 2017 7:57 pm
by PFInterest
bjames310 wrote:The Dow Jones is at record highs with three straight days of gain, yet VTSAX has been down three days in a row. I'm confused.
They are not the same.

Re: How does this work? [Dow Jones up, but Vanguard Total Stock down]

Posted: Fri Jul 28, 2017 10:37 pm
by bjames310
Very educating, thank you all. For some reason I thought Dow Jones tracked the entire stock market. Not sure where I got that from.

Re: How does this work? [Dow Jones up, but Vanguard Total Stock down]

Posted: Fri Jul 28, 2017 11:08 pm
by oldzey
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) currently uses the CRSP US Total Market TR Index, not the DJIA.

Re: How does this work? [Dow Jones up, but Vanguard Total Stock down]

Posted: Sat Jul 29, 2017 4:22 am
by mayhapbh
bjames310 wrote:Very educating, thank you all. For some reason I thought Dow Jones tracked the entire stock market. Not sure where I got that from.
You might enjoy this episode of the Planet Money podcast: http://www.npr.org/sections/money/2017/ ... e-the-hype

Re: How does this work? [Dow Jones up, but Vanguard Total Stock down]

Posted: Sat Jul 29, 2017 4:41 am
by Carl53
I thought I noticed that on the 25th and again on the 26th that VTASX had dropped while the Dow, SP500 and Nasdaq all increased. I don't believe that I had noticed that happening before. Edit: Looking back at the data, either the originally Yahoo reported closing for VTASX was incorrect or I was just mistaken for the 25th. Nevertheless the situation did occur on the 26th.

Re: How does this work? [Dow Jones up, but Vanguard Total Stock down]

Posted: Sat Jul 29, 2017 5:13 am
by The Wizard
Carl53 wrote:I thought I noticed that on the 25th and again on the 26th that VTASX had dropped while the Dow, SP500 and Nasdaq all increased. I don't believe that I had noticed that happening before. Edit: Looking back at the data, either the originally Yahoo reported closing for VTASX was incorrect or I was just mistaken for the 25th. Nevertheless the situation did occur on the 26th.
There is no mutual fund ticker "VTASX".

However, on 7/25, VTSAX went UP from 61.77 to 61.98.
On 7/26, it did decline to 61.95.