Charles Dow is one of Wall Street's most significant legends for two very significant reasons -- he created our financial bible, the Wall Street Journal (WSJ), as well as our first market barometer, the Dow Jones Averages. He is also the father of technical analysis. Ironically, Dow went relatively unnoticed for his achievements and died quietly at age 51 in his modest Brooklyn apartment in 1902 -- years before he was credited with revolutionizing the way we now talk about the stock market.

You could explain "his" theory and its technical applications, but during his lifetime, he never laid out a "Dow Theory," per se. When he first began compiling stock market averages in 1884 -- before the WSJ even existed -- he hadn't established much besides an index with an all-inclusive "index number" by which to measure the stock market. Later he added his intuitive opinions. In fact, the Dow Theory as we know it today was only named and extracted from his WSJ editorials twenty years after his death by other market technicians, like William P. Hamilton.

Standing over six feet tall, yet slightly stooped and weighing over 200 with dark eyes and brows, a jet-black beard, and walrus mustache, ultra-conservative Dow had a grave air about him, spoke with measured speech and was reminiscent of an overly serious college professor. He never raised his voice and often said it took him a full 24 hours to get angry, and once angry, he stayed angry. The professorial analogy is strengthened by the fact that, working during the end of the robber baron era, he never chose to play that game, never tried to make a market fortune for himself; he instead chose, to be a sidelines observer and commentator.

He was born on a Connecticut farm in 1851 and worked odd jobs as a kid. His father died when he was six. When he was old enough to choose his career, he chose to abandon farm life for the pen. Following a scant education, he apprenticed for six years with the influential Massachusetts newspaper, the Springfield Republican. Then he moved to a Providence, Rhode Island paper, where he found his niche in financial writing while covering the mining industry beat.

Having made a modest name for himself, Dow, at 31, next ventured to New York and in 1882, founded Dow, Jones & Company with fellow reporter Eddie Jones. They used second-hand office equipment and worked out of a tiny, one-room office in a ramshackle building at 15 Wall Street, building a profitable news agency. They provided daily financial news updates to subscribers, who were mostly typical Wall Street wags. Printed news was scarce on the Street, and there was a value to being plugged into news sources even if they were little more reliable than the gossip proliferating through the crowd. So, their service was cherished, and the firm grew rapidly within the year. Soon, they started publishing a two-page newspaper called the Customer's Afternoon Letter -- the WSJ's predecessor.

It was in the Letter that Dow first published his average, which he left unnamed. For example, on February 20, 1885, his average was compiled from 14 companies -- 12 railroads and two industrials -- whose closing prices totaled 892.92. Dividing this figure by 14, he came up with 63.78. Since the previous day's close was 64.73, the market was said to be down nearly a point for the day. A more precise observer might have been able to note that it was down 1.47 percent. The index was the first enduring attempt at precise market measurement. The index also gave birth to what would later evolve into the entire realm of "technical" analysis, wherein people forecast future price activity based on pricing history.

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