Most times when someone says “How did the Market do today?” They are speaking of the Dow Jones Industrial Average.
On June 8th, two changes will be made to the Dow Jones Industrial Average to better reflect our economy and update the index.
“The Out’s” : General Motors (GM) and Citigroup (C), ” The In’s” : Cisco (CSCO) and Travelers (TRV)
According to the Dow Jones Averages Website, which is interesting, and worth a look if you have a spare moment, http://www.djaverages.com/,
“While there are no rules for component selection, a stock typically is added only if it has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors and accurately represents the sector(s) covered by the average.”
Who Makes the Changes?
In an interesting fact, along the lines of “I Bet You didn’t Know this!”, the Managing Editor of the Wall Street Journal is the person who picks the new members of the index. While this duty may seem easy, do not underestimate the embarrassment of picking a short lived member for such a well known and important American index.
In closing, a couple of facts and an interesting comment:
- The Dow Jones Industrial Average current has 30 Participants, originally there were only 12, but on Oct 1, 1928 the membership was broadened to 30 to be more reflective of the US Economy.
- GE remains as the only participant under its’ original name, many others have evolved and may be a relative of another participant, but only GE remains as an original.
- With the addition of Cisco and removal of GM, the index becomes slightly more weighted towards Technology, correctly tilting the index towards a more modern economy in our opinion.
Have a great day! JK