By Paul Larson (TMF Parlay)

( January 5, 2000 ) -- As we launch into a new century, The Motley Fool is launching a new index called the NOW 50. To be concise, I think this index will beat the pants off the Dow in the coming year simply because the NOW 50 is made up of companies that are established yet have fundamentally bright prospects for the coming years.

One thing I like about the NOW 50 is that the index was created with the help of the Foolish community. Through literally thousands of message board postings and e-mails, the trustees of the NOW 50 were given hundreds of ideas of companies to add to the index. I respect the Foolish community's opinion (look at how well the Voting Fools have done in the past Duels), and to create an index starting with the community's collective intelligence is simply an awesome thing.

Second, each company in the NOW 50 has something going for it that the Foolish trustees found exciting in one way or another. To shed some light on exactly how the companies were selected, let me quote one of our NOW 50 specials:

"With each company we asked ourselves the question: 'How is this company excellent?' Those remaining on the list were the ones that the majority of the trustees singled out as having something exceptional about them -- a leadership quality in innovation, global branding, technology, or strategic vision. Many of the companies, in fact most of them, exhibit superiority in more than one of these fields.

"We reject the Dow Jones Industrial Average as the premier gauge for market performance due to its dependence on the industries of yesterday, its equal weighting, and its unresponsiveness to the changes in the global economy."

Sounds good to me!

In general, the Dow is made up of companies that are largely mature and have meager prospects for growth. The NOW 50, on the other hand, is made up of companies that are in their prime and have many years of vibrant expansion to look forward to. You won't find any old-age, industrial-era companies in the NOW 50. The Dow is then, the NOW 50 is, well, now!

Of course, whenever we paint with such a wide brush we're inevitably going to miss some of the details. The keepers of the Dow index just a few weeks ago made some major changes that, in my opinion, greatly increased the relevance of the index. By finally adding Microsoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSFT)") else Response.Write("(Nasdaq: MSFT)") end if %> and Intel <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INTC)") else Response.Write("(Nasdaq: INTC)") end if %> to the Dow, it went a long way toward breaking the mold of being an index filled with aging giants. Still, there's a lot farther for the Dow to go, and the NOW 50 bests the Dow hands down when looking for companies with growth and relevance in today's economy.

Probably the biggest knock I have against the Dow is the fact that there is little representation in some of today's most promising industries. I'm talking about the Internet, biotechnology, wireless communications, computer hardware, etc. Even when the Dow does have a new-era company in it, the NOW 50 tends to have it, too. Just take a look at some examples of what I consider some of today's hottest sectors and how many companies from that sector are in each index:

Internet/E-commerce 

      NOW 50             Dow 30         
      Microsoft          Microsoft
      Amazon.com                         
      America Online           
      Yahoo!

Networking Hardware
      NOW 50             Dow 30   
      Intel              Intel
      Cisco Systems
      Lucent
      Sun Microsystems

Biotechnology
      NOW 50             Dow 30     
      Johnson & Johnson  Johnson & Johnson
      Merck              Merck
      Amgen
      Biogen
      Medtronic

Wireless Communications
     NOW 50              Dow 30
     AT&T                AT&T
     Cable & Wireless    SBC Communications
     Hughes Electronics    
     Lucent
     Nokia

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