Stock indexes set objective benchmarks for how a stock should perform against peers. Reduces the risk of stock investing.
Farmer turned reporter turned media mogul Charles Dow, with reporter Edward Jones, launched a stock newsletter in 1883. Titled the Customers’ Afternoon Letter, they tracked issues affecting the stock market. Dow’s letter gained a reputation for honesty, integrity, and a lack of bias; they unwilling to pump a stock.
Dow would write short stories about baskets of stock to illustrate general trends. In 1896, Dow chose 12 stocks to create a permanent index that would reflect the overall health of the market, the Dow Jones Industrial Average.
In 1889, the Customers Afternoon Letter was renamed The Wall Street Journal.
GE was the only original component of the Dow Jones index to remain to the modern day. Dow Jones removed it on June 26, 2018, after 122 years. Twice before GE lost its position, briefly, but has been in the index continuously since 1907. After wading aggressively into finance, GE allegedly required a bailout in the 2008 financial crisis to make payroll.