Dow Jones Industrial Average: Heartbeat of America

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The Dow Jones Industrial Average is a composite of 30 stocks that is price-weighted and the character of the average can be assessed merely from the first 3 stocks as a sample, taken alphabetically. 3M is an industrials company that makes Scotch Tape for example and much of its early history was innovation in saving money using chemical processes such as extracting products that had seeped into rocks. It’s early competitive edge was clearly an adaptability into different fields from superior science and engineering. We turn to American Express which delivered express goods like money to areas around the United States. Wells Fargo was founded when American Express decided not to go into California. American Express delivered money to British prisoners of war in Germany and ventured into the investment banking business by purchasing Shearson Lehman and then selling the stake a few years before Lehman went into bankruptcy from the financial crisis. American Express I believe made itself resemble a financial holding company and received government bailout money from the Troubled Assets Relief Program (TARP). Generally all financial institutions which received TARP money lost a degree of control over their management to the United States government. American Express you can see had a big part to play when its president got frustrated he couldn’t access money at all except in big cities in Europe and so he formed a business based around delivering money. The right question to ask about American Express is what is the nature of the money it delivers and the answer is American Express delivers credit. So American Express delivers you what you need but you have to pay it back later. This is not dissimilar to the treatment you get at the workplace when you are given what you need to do your job but you have to pay it back later when you have to do new assignments for your manager. You are paid at the workplace in credits as well as you can use it to buy what you need but you have to pay it back later by more work for more money sure but if you skip on the future work you are at a situation where you take reputational damage and may not be easily employable again. American Express in other words is a bit like a payday lender. That it received a bailout from the government should tell you how bad things were that the payroll department effectively outsourced at many corporations could no longer afford to deliver money to you in credits.

Finally we move to Apple which is an innovative company with a lot of power struggles between a charismatic founder and people who were told to bring him into line. Apple was cited as an example of a company that grew despite recession and you can see Steve Jobs only endured the financial crisis of 2008 by selling his soul as Apple is not meant to carry a market because Apple produces consumer discretionary products and everyone knows discretionary spending is ninety percent done by women in the USA in the consumer area for example in spending on Estée Lauder. He tried to change the nature of the consumer discretionary sector to his products which are bought by men and women and accordingly played a role in changing the American lifestyle which Dick Cheney said was not a compromise.

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