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Dow Jones Wilshire 5000 Index


 

The Wilshire 5000 from 2000 until Mar 30, 2007

The Dow Jones Wilshire 5000 Composite Index, more simply the Dow Jones Wilshire 5000, is a market capitalization-weighted index of the market value of all stocks actively traded in the USA.

Specifics

The index is intended to measure the performance of all publicly traded companies based in the United States having "readily available price data." Hence the index includes nearly all common stocks, REITs, and limited partnership shares traded primarily on the New York Stock Exchange, NASDAQ, or American Stock Exchange.

The price of each issue included in the index is weighted by its relative market capitalization. Let:

  • M = Number of issues included in the index;
  • Pi = Price of one share of issue i included in the index;
  • Ni = Number of shares of issue i.
  • α = a fixed scaling factor

The index is then calculated as:

 \alpha \frac{\sum_{i=1}^{M}{N_i(P_i)^2}}{\sum_{i=1}^{M}{N_iP_i}}


One index point corresponds to about US$1 billion. Hence the value of the index, multiplied by one billion dollars, roughly equals the total capitalization of the US stock market. Dow Jones publishes two versions of the index, one based on full market capitalization and another based on a float-adjusted market capitalization, reflecting the number of shares actually available to trade.

The list of issues is updated monthly to add new listings resulting from corporate spin-offs and initial public offerings, and to remove issues which move to the pink sheets or stop trading for ten days or more.

History

Wilshire Associates began the index in 1974, naming it for the approximate number of issues it included at the time. It was renamed the "Dow Jones Wilshire 5000" in April 2004, after Dow Jones & Company assumed responsibility for its calculation and maintenance.

The Wilshire 5000 did not close above its March 24, 2000 peak until February 20, 2007. A hypothetical investment in the Wilshire 5000, made at the 2000 peak and with subsequent dividends reinvested, did not become profitable on a closing basis until October 3, 2006.[1] On April 20, 2007, the index closed above 15,000 for the first time. On that day, the S&P 500 was still several percentage points below its March 2000 high. Since the turn of the millennium, small cap issues absent from the S&P500 and included in the Wilshire 5000 have slightly outperformed the large cap issues that dominate the S&P 500.

 

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