The Stock Market Just Did Something It Last Did in 1978. History Says This Will Happen Next.

The Dow Jones Industrial Average (^DJI -2.58%), one of three major U.S. stock market indexes, had declined in nine straight trading sessions as of Tuesday, Dec. 17. The last time the Dow Jones strung together a losing streak that long was February 1978.

Specifically, the index fell more than 4% during the nine trading days that ended on Feb. 22, 1978. But the Dow Jones rebounded 14% in the next three months and surged 20% over the next six months. Investors who expect a similar outcome this time can get exposure with the SPDR Dow Jones Industrial Average ETF Trust (DIA -2.61%).

Here’s the bull and bear cases for owning a Dow Jones exchange-traded fund (ETF) right now.

The bull case: The Dow Jones tracks 30 blue chip companies

The Dow Jones Industrial Average is the oldest of the three most popular U.S. stock market indexes. It was first introduced in May 1896 but only tracked 12 industrial stocks at the time. The index has evolved to include 30 companies from nine of the 11 market sectors. The two sectors not represented are utilities and real estate.

The Dow Jones isn’t governed by specific inclusion criteria, but the selection committee tends to pick stocks with three traits: excellent reputations, sustained earnings growth, and widespread interest among investors. To that end, the Dow Jones is often viewed as a benchmark for blue chip (high-quality) value stocks.

The SPDR Dow Jones Industrial Average ETF Trust tracks the performance of the Dow Jones. The ETF lets investors diversify capital across 30 high-quality companies that play a central role in driving the U.S. economy. The 10 largest holdings are listed by weight below:

1. Goldman Sachs: 8.2%
2. UnitedHealth Group: 6.9%
3. Microsoft: 6.3%
4. Home Depot: 5.7%
5. Caterpillar: 5.3%
6. Sherwin-Williams: 5.1%
7. Salesforce: 5%
8. Visa: 4.4%
9. American Express: 4.2%
10. McDonald’s: 4.1%

The last item of consequence is the expense ratio. The SPDR Dow Jones Industrial Average ETF Trust has a below average expense ratio of 0.16%. That means investors will pay $16 per year in fees on every $10,000 invested in the ETF.

The bear case: The Dow Jones has consistently underperformed the S&P 500

The Dow Jones returned 151% during the last decade, which is equivalent to 9.6% annually. Meanwhile, the S&P 500 advanced 200%, compounding at 11.6% annually. The exact same pattern shows up over the last one, three, and five years. In other words, the Dow Jones has consistently underperformed the S&P 500.

Additionally, the Dow Jones currently trades at a more expensive valuation relative to its projected growth. Specifically, its constituent companies, in aggregate, are forecast to grow earnings at 11.3% annually in the next three to five years. Dividing that figure into its current valuation of 21.1 times earnings gives a price-to-earnings-to-growth (PEG) ratio of 1.9. That’s relatively expensive.

Comparatively, S&P 500 companies, in aggregate, are expected to report earnings growth of 15.1% annually during the same period. Dividing that number into its current valuation of 24.7 times earnings gives a PEG ratio of 1.6. That metric isn’t cheap, but it’s cheaper than the Dow Jones’ PEG ratio.

Here’s the bottom line: History says the Dow Jones could rebound sharply in the coming weeks and months. But the index has historically underperformed the S&P 500 and has a higher valuation.

To that end, I’m in no hurry to add a Dow Jones ETF to my portfolio. In fact, I would buy an S&P 500 ETF before a Dow Jones ETF without thinking twice.