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Analysis of the Dow Jones

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  1. Introduction
  2. The perverse effects of financial globalization
    1. Tax havens and offshore centers: new spaces of lawlessness
    2. The issue of terrorist financing and its difference with the money
  3. The fight against money laundering faces a degree of impunity
    1. A stronger fight
    2. Limited effects
  4. Conclusion

In 1884, The Wall Street Journal highlighted the name of Dow Jones to a U.S. index on the New York Stock Exchange to facilitate its forecast as to the activity of the latter. But Charles Henry Dow did not anticipate 20 years later, it would become the global benchmark for tracking the activities of U.S. firms, and that it would remain so for centuries to come.

Originally composed of 11 values, mostly related to industrial activities, it is now among 30 largest-cap U.S. institutions. Indeed, the Dow Jones Industrial Average is a very different index. Historically, it is composed of industrial pride of the economy of a "manufacturing belt", although today the oil companies, pharmaceutical or financial houses are very well represented in this index. Moreover, it is not like most indices, namely an arithmetic average of market capitalization of listed companies, but it is the only clue in the world to be weighted on the value of shares that compose it.

Indeed, why use this as a benchmark, while the Dow, by its composition, it does not really reflect the U.S. economy (which is preferred to the S & P500 for the performance of the U.S. economy)? In addition, the method of calculation allows the selective short-term variations influence the index of companies incorrectly.

Therefore, if the graph history is looked at carefully one will notice that, the "Internet bubble" is absent. The decline has affected the S & P 500, NASDAQ, and a large number of global indices, that is absent from what is referred to as reference. But the sentimental value that it attaches makes one forget its shortcomings and it remains the only index that allows to see the evolution of the economy over 120 years.

Indeed, fears about the U.S. economy have recently resurfaced. Since the subprime crisis in August 2007, which was originally simply a crisis on the assets of large banks, things have changed a lot. Now, all investors have their eyes on the U.S. economy in search of answers: the crisis of liquidity, asset impairments, recession, inflation and the falling dollar, soaring over the raw materials, etc.

At first, the behavior of investors in the Dow Jones will be analyzed , then this paper will try to explain the various factors that influenced these behaviors, and finally compare the observed motion of the Dow Jones to other international markets.

The Dow Jones is moving in an underlying trend upwards since October 2002 and the rebound was made after the Internet bubble. The bull market has been for nearly five years, the U.S. economy is showing robust growth, with an economy driven by the strength of China and its exports. The courses have evolved in a bullish channel, alternating between bouncing on the channel bottom and inflections in contact with the upper limit.

In July 2007, crossing over to higher resistance seemed oblique. A slight pull back occurs, and on July 19, 2007, the Dow Jones reached the bar of 14 000 points. From January to April 2008, the Dow Jones has entered a consolidation phase, after losing more than 11% since the beginning of the year, leaving investors in the worst start since 2003.

Tags: Dow Jones; analysis; influential factors; Comparison of Dow Jones to international markets

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