Dumping GM From The Flawed Dow Jones Index (ETF: DIA)

Roger Nusbaum submits: I have long thought that the Dow Jones 30 is a useless benchmark because of its narrowness and its price weighting. As such, I have never given the Dow Diamonds ETF (DIA) any consideration.

In the current BusinessWeek, Aaron Pressman wrote an article (sub. req.) questioning whether GM should be removed from the Dow 30. He asks a good question in wondering when was the last time anyone thought of GM as a blue chip stock.

My thought to this point was OK, another Dow composition article. But Aaron brought up another, more interesting point which is that many people now own the Dow Jones 30 and by keeping GM in there, the keepers of the Dow are doing DIA holders a disservice. Obviously there is no legal obligation on the part of Dow Jones to do anything but the ETF does put a different kind of focus on the average.

For the life of me, I have no idea why someone would ever buy DIA when there are so many other large cap proxies with fewer flaws.

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