DJIA Member Changes

The keepers of the Dow officially announced this morning that General Motors (GM) and Citigroup (C) would be removed from the index effective June 8th. In their place, Cisco (CSCO) and Travelers (TRV) will be added. The table below summarizes the new weights of each of the 30 stocks in the index based on current prices. Even though CSCO is over four times the size of TRV, its weight in the index (1.7%) will be less than half of TRV's (3.7%). This is due to the fact that unlike most other indices which are market cap weighted, the stocks in the Dow are weighted according to price. Therefore the higher your stock price, the greater your weight in the index.

Leading up to today's announcement, there was some speculation that one of the potential additions to the index would be Google (GOOG). This weekend alone, we read at least two different news articles suggesting that Google could be added. The only problem with this prediction is that GOOG is a $400 stock, and therefore its weight in the Dow 30 would have been huge. If GOOG were added instead of CSCO, it would have made up 27.4% of the index! At that weight, it might as well be called the Dow Jones Google Average.

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Comments

[newsarchist:]

This is blatant DOW manipulation and it's not the first time. They added Kraft at the beginning of the crisis. Grrrrrrrrrrrrrrrrr...

Jun 01 09:15 PM