If you’ve spent five minutes looking at your 401(k) or a brokerage account, you’ve probably seen the Dow Jones Industrial Average. It’s the one everyone talks about on the news. But honestly? The "Daily Dow" is kinda useless if you want to know how the entire U.S. economy is actually doing. It only tracks 30 massive companies. That’s where the Dow Jones Total Stock Market Index comes in. It’s the big picture.
Think of it as the difference between looking at the score of a single baseball game versus looking at the stats for every single player in every league in the country. This index doesn't just care about Apple or Goldman Sachs. It cares about the tiny tech startup in Austin and the mid-sized manufacturing plant in Ohio.
The Dow Jones Total Stock Market Index, which you’ll often see referred to by its ticker symbol DWCF (or sometimes the "Dow Jones U.S. Total Stock Market Index"), is designed to capture basically everything. If a stock is traded on a major U.S. exchange and has readily available price data, it’s probably in here. We're talking about roughly 4,000 stocks.
What Makes This Index Different From Your Standard Dow 30?
Most people get this confused. They hear "Dow" and think of the 30 blue-chip stocks. But the Dow Jones Total Stock Market Index is a completely different animal.
First off, the way it's calculated is way more logical. The famous Dow 30 is price-weighted. That’s a fancy way of saying that a company with a higher stock price has more influence on the index than a company with a lower stock price, even if the lower-priced company is actually bigger. It’s a weird, old-fashioned relic of the 1890s.
The Total Stock Market Index uses float-adjusted market capitalization.
This means the index looks at the total value of all the shares actually available to the public. If a company is worth $3 trillion, it has a massive impact. If it's a small-cap company worth $500 million, it has a tiny impact. This is how most modern investors think the market should be measured. It reflects reality.
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S&P Dow Jones Indices manages this beast. They keep it updated, rebalancing it to make sure they aren't including "zombie companies" or stocks that don't have enough liquidity.
The S&P 500 vs. The Total Market: The Great Debate
You might be wondering: "If the S&P 500 already covers 80% of the market value, why do I need the other 20%?"
It’s a fair question.
The S&P 500 is great, don't get me wrong. But it’s strictly large-cap. By ignoring the Dow Jones Total Stock Market Index, you’re essentially saying you don't care about the "future" Googles and Amazons. Small-cap and mid-cap stocks are often where the most explosive growth happens.
When you buy a fund that tracks the total market, you're buying:
- The giants (Large-cap)
- The established steady-growers (Mid-cap)
- The high-risk, high-reward flyers (Small-cap)
- Even some "micro-caps" that most people haven't heard of yet
Back in the late 90s, or even during the recovery post-2008, there were long stretches where smaller companies outperformed the big dogs. If you were only in the S&P 500, you missed that extra juice.
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How To Actually Invest in the Dow Jones Total Stock Market Index
You can’t go to a website and "buy" the index itself. It's just a math formula. You have to buy a product that mimics it.
Most people use ETFs (Exchange-Traded Funds) or Mutual Funds. You've probably heard of the Vanguard Total Stock Market ETF (VTI). While VTI actually tracks a slightly different index—the CRSP US Total Market Index—the performance is almost identical to a fund tracking the Dow Jones version. Schwab has the Broad Market ETF (SCHB), which is another cousin in this family.
The expense ratios on these things are usually dirt cheap. We're talking 0.03% or so. If you put $10,000 in, you're paying maybe $3 a year in fees. That’s basically free.
Why do people love these? Simplicity.
Managing a portfolio of 20 individual stocks is a nightmare. You have to read earnings reports. You have to worry about a CEO getting fired. With the Dow Jones Total Stock Market Index, if one company goes bankrupt, you don't even feel it. There are 3,999 others to pick up the slack.
The Nuance: Is It Always The Best Choice?
Now, I'm not going to sit here and tell you it's perfect. There are downsides.
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Because it’s market-cap weighted, the biggest companies still run the show. Even though there are thousands of stocks in the index, the top 10 companies—the Nvidias and Microsofts of the world—still make up a huge chunk of the movement. If big tech crashes, the whole index is going down, even if the small-cap dry cleaners and biotech firms are doing great.
Also, some people find it "boring."
You will never "beat the market" if you own the Dow Jones Total Stock Market Index because you are the market. You'll never have that story at a cocktail party about how you tripled your money on a penny stock. You're signing up for average returns. But historically, "average" in the US stock market is about 10% a year over the long haul. Most professional hedge fund managers can't even beat that.
A Quick History Lesson
The index was originally known as the Wilshire 5000. It was created in 1974. Back then, it actually had about 5,000 stocks. Today, the number of public companies has shrunk a bit due to mergers and private equity taking companies off the board, which is why the "Total Market" usually sits between 3,500 and 4,000 names now.
In 2004, Dow Jones took over the marketing and branding of the index from Wilshire (though they eventually split and created competing versions). It’s important because it forced the industry to standardize how we measure the "entire" economy.
Actionable Steps for Your Portfolio
If you're looking to simplify your financial life, here is how you handle the total market index:
- Check your current exposure. Log into your brokerage. Look at your "Large Cap" vs "Small Cap" holdings. If you're 90% in the S&P 500, you are missing the diversification of the total market.
- Consider a "Total Market" fund as your core. Many experts, like JL Collins (author of The Simple Path to Wealth), argue that a total market index fund should be 100% of your stock portfolio. It’s the ultimate "set it and forget it" strategy.
- Watch the expense ratios. Don't pay more than 0.10% for a total market fund. There are too many cheap options out there to ever pay a high commission or management fee for this specific type of investment.
- Don't panic over the names. Whether your fund tracks the Dow Jones version, the CRSP version, or the Russell 3000, the results will be 99% the same. Don't get paralyzed by the branding.
The real power of the Dow Jones Total Stock Market Index isn't just in the numbers. It's in the peace of mind. You own a piece of every legal, profit-seeking machine in the United States. When the country grows, you grow. It's that simple.
Stop trying to find the needle. Just buy the haystack.