Indexes

To calculate the DOW Index, you add all the prices. It's described as a "Price-Weighted Index". Similarly, the S&P is described as a "Market-Cap Weighted Index" ... presumably because its calculation requires you to add all the Mkt Caps. I've always felt that describing these Indexes as "Weighted" was misleading. Perhaps that's because I was thinking "Weighted Averages". Perhaps that's the result of creeping senility. Anyway, now I'm happy. I see that the Gains are weighted averages - even if the Indexes aren't. Besides my confusion over the use of the adjective "weighted", I've always been annoyed at the use of a Sum of Prices to generate an Index. I imagine Berkshire-Hathaway as being a component of a 31-stock DOW. It's weight would be obscene. It'd generate 99% of the value of the Index. On the other hand, as the component of a 31-stock "Mkt-Cap Weighted" DOW, it's weight would be respectable.