GE booted from the Dow, to be replaced by Walgreens

CNBC ^ | 6/19/18 | By Angelica LaVito

[SunkenCiv]

Quite right, it started out with a lot of mining stocks, possibly some railroads, maybe steel, and has kept pace with the changes of the economy... hmm, here it is, originally 12 companies — American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Laclede Gas, National Lead, North American, Tennessee Coal and Iron, U.S. Leather pfd. and U.S. Rubber. [ https://www.investopedia.com/ask/answers/100214/who-were-original-dow-jones-industrial-average-djia-companies.asp ]

[SunkenCiv]

THat make no sense. The Dow 30 is maintained and reflects a broad base of different types of business.

[PGalt]

Will Theranos meltdown have any effect on Walgreen shares?

[Paladin2]

That the Dow is “maintained” means that it is manupulated.

What does it correlate with over the last 110 years?

Why is it now better than a total valuation of the market?

The Dow was easy to calulate in the 1900s. Computers made it obsolete in the 70s.

[shanover]

People search for Obama legacy. It really is not hard when such legacy is American rot.

[Paladin2]

30 companies is NOT a broad base.

[higgmeister]

My Dad retired from GE. I am so proud that he passed away almost forty years ago and didn’t have to watch the slow demise of GE. I’m an also glad that I saw the writing on the wall and sold my shares of his stock several years ago.

[Moonman62]

https://qz.com/894558/the-dow-jones-industrial-average-breaking-20000-is-meaningless-just-like-the-dow-itself/

...

That’s a fairly good article and is probably informative for many people. However, the DJIA is not a joke, nor is it a scam like Global Warming. It is exactly what Dow Jones claims it is.

[SunkenCiv]

No, it’s maintained, in order to better reflect the way businesses change. There are broader indices, like the S&P 500, which is followed by lots of mutual funds. There’s no manipulation going on.

[SunkenCiv]

[various sources] GE has dropped 15 percent in 2018, and more than 75 percent since August 2000, pays 12 cent quarterly dividends (down from 24 cents a year ago).

[Paladin2]

It’s only maintained to swap out stocks of companies on the decline with others of companies on the rise or that have become very successful. The divisor is adjusted at the time of company change so that the Dow number itself shows no discontinuity at that moment.

It’s value as comparison with other times in history based on absolute value is compromised. Studies of short term behavior may be instructive when comparing two different periods of time.

Here is a partial study of its history and underlying math:

https://www.zerohedge.com/news/2017-09-06/dow-jones-indices-changes-djia-divisor

and

https://www.zerohedge.com/news/2014-05-10/all-time-high-dow-jones-industrial-average-hoax

[Paladin2]

"The committee that runs the Dow prefers no more than a 10-to-1 ratio between the high and low stocks in the index."

Sounds like manipulation to me.

http://money.cnn.com/2018/06/19/investing/ge-dow-jones-walgreens/index.html

[Paladin2]

I found the following discussions to be of interest:

https://www.foxbusiness.com/politics/big-changes-come-to-the-dow

(September 10, 2013)

"The changes "were prompted by the low stock price of the three companies slated for removal and the Index Committee's desire to diversify the sector and industry group representation of the index," S&P Dow Jones Indices LLC, the company that oversees the Dow, said in a statement."

"If the changes were made at the beginning of the year, the Dow would be higher by 558 points, according to Charles Brady, senior editor at FOX Business."

"Listing Apple or Google, or any other high-flying stock, in the Dow would be difficult, due to the way the index is calculated. Rather than weighting component companies based on market value, as the Standard & Poor's 500 and most other major indexes do, the Dow weights its 30 components based on the price of their shares.

The way Apple's shares currently trade, it would overwhelm the Dow with about a 25% weighting, double the sway of current Dow component IBM. Apple alone could move the Dow regularly by 100 points or more, given its recent trading swings. And even if Google does a planned stock split cutting its share price in half, it would still command a nearly 20% weighting in the average."

http://money.cnn.com/2015/03/06/investing/apple-join-dow/index.html

(March 6, 2015)

" Apple (AAPL) will replace AT&T (T) in the Dow -- an exclusive club of 30 stocks that also includes tech giants Microsoft (MSFT), Intel (INTC) and Cisco (CSCO) as well as brand-name consumer firms Walmart (WMT), Coca-Cola (KO) and Disney (DIS).

"As the largest corporation in the world and a leader in technology, Apple is the clear choice for the Dow Jones Industrial Average," said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a statement. "

******************************************

Funny

[Paladin2]

I found the following discussions to be of interest:

https://www.foxbusiness.com/politics/big-changes-come-to-the-dow

(September 10, 2013)

"The changes "were prompted by the low stock price of the three companies slated for removal and the Index Committee's desire to diversify the sector and industry group representation of the index," S&P Dow Jones Indices LLC, the company that oversees the Dow, said in a statement."

"If the changes were made at the beginning of the year, the Dow would be higher by 558 points, according to Charles Brady, senior editor at FOX Business."

"Listing Apple or Google, or any other high-flying stock, in the Dow would be difficult, due to the way the index is calculated. Rather than weighting component companies based on market value, as the Standard & Poor's 500 and most other major indexes do, the Dow weights its 30 components based on the price of their shares.

The way Apple's shares currently trade, it would overwhelm the Dow with about a 25% weighting, double the sway of current Dow component IBM. Apple alone could move the Dow regularly by 100 points or more, given its recent trading swings. And even if Google does a planned stock split cutting its share price in half, it would still command a nearly 20% weighting in the average."

http://money.cnn.com/2015/03/06/investing/apple-join-dow/index.html

(March 6, 2015)

" Apple (AAPL) will replace AT&T (T) in the Dow -- an exclusive club of 30 stocks that also includes tech giants Microsoft (MSFT), Intel (INTC) and Cisco (CSCO) as well as brand-name consumer firms Walmart (WMT), Coca-Cola (KO) and Disney (DIS).

"As the largest corporation in the world and a leader in technology, Apple is the clear choice for the Dow Jones Industrial Average," said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a statement. "

******************************************

Funny

[foreverfree]

bump