Will AI help investors and entrepreneurs make more money?

December 19, 2023

Yes, Artificial intelligence (AI) bots will help investors and entrepreneurs make more money. There are countless of ways in which AI will boost business and investing performance by analyzing big data sets, identifying patterns, and making predictions. 

AI bots will become the best investment advisors and stock market analysts. AI bots will consistently beat human advisors in quality and depth of stock picks for sure. AI will also excel in creating innovative indices and exchange traded funds (ETFs). In this article, let's take a quick look at the iconic Dow Jones index and its controversial relatively new owner Rupert Murdoch. Let's see what we can learn about money by distilling the composition of the Dow and the business storyline of Mr. Murdoch.  

Quick note. Today, the Dow Jones Industrial Average (DJIA, Dow Jones or the Dow) reached its fifth straight record high, closing at 37,557.92. Word to the wise. It's time to take some profits for the holidays. Of course, stay invested for the long run, but don't think that the ride will be upwards all the time. Inevitably, some down hill periods will come.  

The Dow Jones listing began in 1896 and is one of the oldest and most iconic stock indexes in the United States. The list is a composed of 30 large companies selected by a committee. The 30 components are reviewed periodically in light of the following factors: company reputation; history of sustained growth; interest to investors; sector representation of the broader market; main presence in the United States. Companies can be replaced to ensure the composition of the index reflects more accurately the overall financial market and economic landscape in the U.S. Newest additions were Amgen, Honeywell, and Salesforce, which were added on August 31, 2020, replacing ExxonMobil, Pfizer, and Raytheon. 

The Dow Jones is one of the most widely followed stock market indices in the United States. It provides a snapshot of the overall health and performance of the U.S. stock market and is used as a barometer of the country's economic conditions. The 30 companies in the index are considered to be benchmark leaders in their respective industries. These companies are often referred to as "blue-chip" representatives of the U.S. economy as a whole. The Dow aims to provide a diversified sample of industries to reflect the broader economy.

Companies in the Dow Jones index are selected by the editors of The Wall Street Journal, which is owned by Dow Jones & Company, a subsidiary of News Corp. The selection process is not purely quantitative, as it is with some other indices like the S&P 500. Instead, the editors use their qualitative judgment to choose companies that are influential, widely recognized, and have a significant impact on the U.S. economy.

Unlike many other stock market indices that are weighted based on the market capitalization (market value) of their constituent companies, the Dow Jones is weighted by the share prices of its constituents. This means that the stock prices of the 30 companies are used to calculate the index, rather than their market values. As a result, companies with higher stock prices have a greater influence on the index's movements even if they have smaller total valuation (market capitalization). This is considered by many experts to be a significant flaw in the Dow. While the Dow aims to represent a variety of industries, it may not be as diversified as other indices like the S&P 500, which includes 500 companies from a broader range of sectors. 

The Dow Jones Industrial Average has undergone numerous changes since its inception in 1896. Companies are added or removed from the index periodically, often due to mergers, acquisitions, or changes in the relative importance of certain industries. The Dow's limited number of constituents and price-weighted methodology can result in a skew toward certain industries and may not fully represent the entire U.S. stock market. Despite its limitations, the Dow Jones Industrial Average remains an iconic and closely watched indicator of stock market performance and economic conditions in the United States. Changes in the Dow can have a psychological impact on investors and can influence market sentiment.

In summary, the Dow Jones Industrial Average is a price-weighted index of 30 large and influential U.S. companies selected by the editors of The Wall Street Journal. It provides a historical and widely recognized snapshot of the U.S. stock market but has certain limitations in terms of diversification and representation compared to other indices like the S&P 500.

Here are the 30 companies and their respective valuations as of December 19, 2023:

American Express (NYSE:AXP) $135.36B billion - credit card and financial services 

Amgen (NASDAQ:AMGN) $149.01 billion - pharmaceutical  

Apple (NASDAQ:AAPL) $3.06 trillion - digital technology 

Boeing (NYSE:BA) $159.42 billion - commercial and military aircraft

Caterpillar (NYSE:CAT) $149.14 billion - construction and mining equipment

Chevron (NYSE:CVX) $285.39 billion - oil and gas 

Cisco Systems (NASDAQ:CSCO) $203.91 billion - internet networking products and services

Coca-Cola (NYSE:KO) $254.35 billion - beverages

Dow, Inc. (NYSE:DOW) $38.52 billion - chemicals and materials

Goldman Sachs (NYSE:GS) $124.72 billion - investment banking and asset management company

Home Depot (NYSE:HD) $350.40 billion - home improvement and construction retailer 

Honeywell International (NASDAQ:HON) $134.88 billion - HVAC and diversified manufacturing 

Intel (NASDAQ:INTC) $196.72 billion - semiconductors

International Business Machines (NYSE:IBM) $147.52 billion - information technology 

Johnson & Johnson (NYSE:JNJ) $376.64 billion - healthcare manufacturing 

JPMorgan Chase (NYSE:JPM) $486.99 billion - banking

McDonald's (NYSE:MCD) $210.88 billion - fast food restaurant 

3M (NYSE:MMM) $58.68 billion - manufacturing 

Merck (NYSE:MRK) $269.85 billion - pharmaceutical 

Microsoft (NASDAQ:MSFT) $2.77 trillion - software 

Nike (NYSE:NKE) $186.65 billion - sportswear 

Procter & Gamble (NYSE:PG) $344.51 billion - household products

Salesforce.com (NYSE:CRM) $255.88 billion - cloud-based enterprise software 

Travelers (NYSE:TRV) $42.52 billion - property and casualty insurance

UnitedHealth Group (NYSE:UNH) $484.70 billion - health insurance 

Verizon (NYSE:VZ) $157.95 billion - telecommunications 

Visa (NYSE:V) $522.58 billion - credit card 

Walgreens Boots Alliance (NASDAQ:WBA) $22.44 billion - pharmacy retail

Walmart (NYSE:WMT) $418.72 billion - retail 

Walt Disney (NYSE:DIS) $171.92 billion - entertainment 

Rupert Murdoch

Rupert Murdoch is a prominent media mogul and business tycoon. He was born on March 11, 1931, in Melbourne, Australia. Murdoch is known for building a vast media empire that includes newspapers, television networks, and other media properties around the world. Some of his most notable media holdings and ventures include:

• News Corporation: Rupert Murdoch founded News Corporation (now known as 21st Century Fox) in 1979. This media conglomerate expanded rapidly and became a major player in the global media industry. News Corporation owned and operated numerous newspapers, television networks, and film studios, including Fox News, The Wall Street Journal, The Times (UK), and 20th Century Fox.
• News Corporation Split: In 2013, Rupert Murdoch divided his media empire into two separate publicly traded companies: 21st Century Fox (now part of The Walt Disney Company) and News Corp. This decision was made to separate the entertainment and publishing assets of the conglomerate.
• News Corp: News Corp primarily focuses on publishing and includes assets like The Wall Street Journal, The New York Post, and The Times (UK), as well as book publishing and digital properties.
• 20th Century Fox: The entertainment division of Murdoch's empire, 20th Century Fox, was a major film and television production company responsible for producing and distributing movies, television shows, and other forms of entertainment.
• Fox News: Rupert Murdoch played a key role in the creation and success of Fox News, a prominent cable news network known for its conservative-leaning programming. Fox News has had a significant impact on American media and politics.

Rupert Murdoch has been a highly influential figure in media and politics, particularly in the United States and the United Kingdom. His media properties have often been associated with conservative and right-leaning viewpoints. Murdoch's influence has extended beyond media, as he has been involved in various political and business ventures.

Rupert Murdoch built his media business through a combination of shrewd acquisitions, innovation, and a willingness to take risks. 

• Inherited Newspaper Business: Rupert Murdoch inherited a small newspaper business from his father, Sir Keith Murdoch, in Australia. He took over the Adelaide News in 1952 and soon expanded his holdings by acquiring other newspapers in Australia.
• Expansion in Australia: Murdoch's early success in Australia allowed him to expand his media holdings within the country. He acquired newspapers in major Australian cities, including Sydney and Melbourne. His strategy included targeting tabloid-style publications that appealed to a broader audience.
• International Expansion: In the 1960s and 1970s, Rupert Murdoch began his international expansion by acquiring newspapers in the United Kingdom and the United States. His acquisition of the News of the World and The Sun in the UK marked his entry into the British media market.
• Investment in Television: Murdoch recognized the growing importance of television and invested in television broadcasting. In the 1980s, he launched Sky Television (now Sky UK), a satellite television service that became a significant player in the industry. He also acquired U.S. television stations.
• Consolidation and Diversification: Murdoch continued to acquire newspapers, television networks, and other media properties around the world. He consolidated his holdings under the umbrella of News Corporation, creating a global media conglomerate. This included major acquisitions such as 20th Century Fox and The Wall Street Journal.
• Innovation and Risk-Taking: Murdoch was known for his innovative approach to media. He was one of the first to embrace the use of satellite technology for television broadcasting. Additionally, he launched the Fox Network in the United States, which challenged the dominance of the established networks. Fox became known for its programming innovations, including reality shows and edgier content.
• Political and Regulatory Maneuvering: Murdoch was not only a media entrepreneur but also a savvy political operator. He used his media properties to support political candidates and causes aligned with his interests. He also navigated regulatory challenges and changes in media ownership rules to expand his empire.
• Splitting the Empire: In 2013, Rupert Murdoch split his media empire into two separate publicly traded companies: 21st Century Fox (later acquired by Disney) and News Corp. This allowed him to separate the entertainment and publishing assets.
• Continued Expansion: Despite facing challenges and controversies over the years, Murdoch's media empire continued to expand and evolve. His influence extended to various media forms, including newspapers, television, film, and digital media.

Rupert Murdoch's ability to adapt to changing media landscapes, his willingness to take calculated risks, and his focus on building a global media presence played key roles in the growth and success of his business empire. The man is 92 years old and will not be around for much longer. Humans lifespan is relatively short, rarely surpassing 100 years. 

AI should be able to help humans create better companies, choose stocks wisely, and discovering ways to live happier and longer lives. Stay tuned. 

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