Who Was Charles Dow?

Charles Dow was an American financial journalist who co-founded Dow Jones & Company with Edward Jones and Charles Bergstresser. He pioneered the development of The Wall Street Journal and the Dow Jones Industrial Average.

Charles Dow formulated the Dow Theory, an analysis of maximum and minimum market fluctuations and the basis for technical analysis. Dow died on Dec. 4, 1902.

Key Takeaways

• Charles Dow co-founded Dow Jones & Company with Edward Jones and Charles Bergstresser.

• Dow formulated the Dow Theory, an analysis of maximum and minimum market fluctuations.

• He is the co-founder of The Wall Street Journal and the Dow Jones Industrial Average.

Early Life and Education

Charles Dow was born on Nov. 6, 1851, in Sterling, Connecticut. At the age of 21, he began his career as a reporter with the Springfield Daily Republican in Massachusetts before joining The Providence Journal in Rhode Island.

In 1880, Charles Dow moved to New York City and began his career in financial reporting at the Kiernan Wall Street Financial News Bureau with Edward Jones.

Dow Jones Industrial Average

In 1882, Charles Dow and Edward Jones founded Dow, Jones & Co., a financial news bureau, financed by Charles Bergstresser, a silent partner.

The bureau published the Customers' Afternoon Letter, which garnered a circulation of over 1,000 subscribers. The precursors to the Dow Jones Industrial Average appeared in the small newsletter as averages of nine stocks in the shipping and railroad industry, giving readers insight into whether the market was advancing or retreating.

By 1896, the first DJIA was calculated using the top 12 stocks in the market. The initial calculation was a simple sum and divide that yielded 40.94 as the first published average.


The number of stocks included in the first Dow Jones Industrial Average in 1896.

In 2022, 30 stocks are included in the average.

The Wall Street Journal

The success of the Customers' Afternoon Letter led Dow and Jones to start The Wall Street Journal with its first issue published on July 8, 1889. The new format of the journal provided extensive daily financial information to its readers.

Before The Wall Street Journal provided transparency, companies often obscured earnings and revenue, making it difficult for investors to decipher market information.

Dow Theory

As the Dow Jones Industrial Average evolved, Charles Dow noticed patterns in his market averages. The Dow Theory analyzes maximum and minimum market fluctuations to make accurate predictions on the direction of the market and is based on six tenets:

• The prices of stocks and indices reflect all available information, known as the Efficient Market Hypothesis.

• Primary trends last for one or more years or more and define whether a market is bullish or bearish​, secondary trends are corrective moves that last between three weeks and three months, and minor trends that are short-term fluctuations in stock prices.

• Primary trends remain in effect until a clear reversal occurs.

• Primary trends tell investors to profit from a bull market or a bear market and the public then participates in buying or selling.

• Volume should increase in the direction of the trend to give the trend validation.

• Two opposing primary trends cannot coexist on two different market indices. A primary trend discovered on a market index must always be confirmed by a similar trend on another market index.

What Is the Dow Jones Transportation Index?

Developed as a precursor to the Dow Jones Industrial Average, and still used today, the index is a running average of the stock prices of twenty transportation corporations.

How Did The Dow Theory Evolve?

Charles Dow developed the Dow Theory but died in 1902 before seeing its full implications. S.A. Nelson and William Hamilton refined the theory into what it is today. Nelson wrote The ABC of Stock Speculation and was the first to use the term "Dow Theory.” Hamilton further refined the theory through a series of articles in The Wall Street Journal from 1902 to 1929 and wrote The Stock Market Barometer in 1922, explaining the theory in detail. In 1932, Robert Rhea further refined the analysis of Dow and Hamilton in his book, The Dow Theory.

What Publications Has Charles Dow Written?

Besides developing The Wall Street Journal, Dow also wrote a history of steam navigation between Providence and New York as well as a history of nineteenth-century Newport, Rhode Island.

The Bottom Line

Charles Dow influenced the financial investing arena with the creation of The Wall Street Journal and the Dow Jones Industrial Average. His Dow Theory remains a standard for market analysis.

Article Sources
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  1. U.S. Library of Congress. "Dow Jones Industrial Average First Published."

  2. The Wall Street Journal. "Dow Jones Timeline."

  3. CMC Markets. "Dow Theory."

  4. Stock Charts. "Dow Theory."

  5. Rhode Island Heritage Hall of Fame. "Charles Henry Dow."