Tracking the development of the stock market is a full-time job. Economists, stock brokers, and private investors spend long hours each and every week doing much more than crunching numbers. The free market is constantly changing. Even when the market shuts down here in the United States, trading is going on in other markets across the world. These international markets all tie together as a part of the global economy that determines things like the cost of oil and energy prices. Investors researching stocks that are worth buying have to juggle these far reaching factors while making decisions on a smaller scale.
That is because the global market and domestic markets are deeply intertwined. By the numbers, most investors are not directly tied to DOW-Jones level stocks. However, the DOW has the power to turn the rest of the market on its head in the event of dramatic changes. The reason for this is because a lot of the smaller companies that the majority of stock holders have an interest in are either a subsidiary of or partly owned by someone tied to a larger company. Fluctuations in the DOW represent the changing interests of smaller investors as much as the interests of much larger investment firms.
On the lower end of the scale, investors who are cultivating personal portfolios tend to have a much more intimate understanding of the stocks that they are purchasing. The reason for this is because they have less capital to throw around. They need to turn it into earnings, and the best way to ensure that an investment is successful is to do the research. That means getting familiar with the mission and history of these smaller companies to get a better grasp on what stocks to buy. Research on these companies continues throughout the duration of the investment, because any media exposure that a smaller company receives can have a much more dramatic impact on their stock value.
Cultivating a portfolio means knowing how to take all of this data and synthesize it into useful information. Traders have to utilize that data to make in the moment decisions on whether or not to buy or sell. That is why taking the time to learn about a business and really know it can make all the difference on the trading floor.