Investments and Portfolio Management?

When we see in the news that 'the market' did something (up or down) there is a tendency for that 'market' to be the DOW (the index)...
Can anyone give me some information as to what impact does this have (good or bad) upon the investing public? Which market(s) are 'the best' at indicating what's transpiring at any given time? What overall data should investors concern themselves with?

What you are referring to is an "index". The Dow, the S&P 500, the Nasdaq, and many other groups of stocks are simply an indication of how stocks within that group performed on some kind of weighted average. (I know there is a specific methodology involved in how these indexes are put together, but I'm not familiar with that.) You're more likely as an investor to be concerned about an index if you own shares of a mutual fund or ETF (exchange traded fund, a fund which mirrors the performance of an index) that is closely tied to such an index. Most 401k plans, for example, have a choice of several index funds to choose from. If you are looking to buy individual stocks, though, you probably don't need to be quite so concerned about the indexes being up or down, though you may discover that there is a relationship between your investment choices and the way that certain indexes perform.

As for what data you should concern yourself with as an investor, stick to the following fundamentals: earnings and future earnings potential. Almost always, with rare exceptions, good earnings will drive a companies stock price up, and bad (or sometimes just "lower than expected") earnings will drive it down. Earnings potential by itself, though, is not a good indication. Do your own research, especially by looking over company filings on the SEC website ( http://www.sec.gov ) and look at a companies prospects in the company's own words.

As for what to avoid, anything you receive in your e-mail about companies that you should buy, generally your money is better off shoved down the toilet.

Any two well diversified portfolios will be highly correlated. The DJ averages and the S&P 500 have over 95% correlation. They are highly correlated with the NASDAQ index -- even though the makeup of those indices are very different. therefore, when you hear that the market went down it means that your well diversified portfolio probably went down as well. If you knew the beta of your portfolio, you would know that your loss was approximately beta times the loss of the index.

And that is why people pay attention to the indices.