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The new owners of the DJIA are considering changes to the way the iconic index is calculated in...

  • Sunday, September 23, 2012, 9:15 AM ET
    The new owners of the DJIA are considering changes to the way the iconic index is calculated in order to be able to include [[take a guess]] without it holding too much sway on the price-weighted gauge. "Most institutional investors have moved on from the index," says UBS' Mark Haefele. YTD, the (Apple-free) DJIA +11.6% vs. the S&P 500 +16.1%.
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This news story has 13 comments:

  •  
    Cool. Maybe it will be useful after the fix.
    23 Sep 2012, 10:25 AM Reply Like
  •  
    It is already unuseful since it doesn't take into account share count. Changing the way it is calculated would make it incomparable to historical periods. Loss-loss.
    23 Sep 2012, 12:26 PM Reply Like
  •  
    All they have to do is convince Apple to do a 1-3 split and it would enter the DJIA with just slightly more weight than IBM.
    23 Sep 2012, 10:40 AM Reply Like
  •  
    Why don't they just add AAPL and then the Dow can be above 14k overnight? Maybe it will start a wealth effect ; )
    23 Sep 2012, 10:57 AM Reply Like
  •  
    I never understood the reasoning behind having the stock price be the weight of a stock and not its market cap.

    Comparing the impact of BAC and IBM:
    IBM:BAC in stock price: 22.6
    IBM:BAC in market cap: 2.4

    Some people have the misconception that that IBM/AAPL/GOOG are expensive because they have high stock prices. This seems to just exacerbate that type of thinking.
    23 Sep 2012, 11:09 AM Reply Like
  •  
    I concur, the DJIA calculation process makes it basically useless. Too bad the S&P 500 sinned and changed its calculation procedure in 2005 (or whatever) -- from shares outstanding to "float". That made it loose its historical comparability.
    23 Sep 2012, 12:28 PM Reply Like
  •  
    It was a completely different trading environment 100 years ago to today.
    23 Sep 2012, 04:52 PM Reply Like
  •  
    Not to mention 20 years ago to today.
    23 Sep 2012, 05:14 PM Reply Like
  •  
    Very, very true.

    If they are going to change it recalculate back over 100 years so there is some relevance.
    23 Sep 2012, 05:19 PM Reply Like
  •  
    The DJIA is a less useful than the weather report.... are we hot, or cold.
    23 Sep 2012, 01:23 PM Reply Like
  •  
    The DJ30 has always served as a slightly stodgier version of the SP500 and likewise the Nasdaq was hotter than the SP500. Measuring their relative performances was a good tell on fear vs greed. Now it's all about AAPL. Sure, put AAPL in the Dow30. There's no better sell signal.
    23 Sep 2012, 05:55 PM Reply Like
  •  
    This is simply a move to entice retail investors. Adding the most widely held and talked about stock on the market will surely boost the DJIA. Although the DJIA is not the most widely followed index amongst the investment management industry, it is still the headline number dispersed by media sources. A rising DJIA would get some retail money off the sidelines.
    23 Sep 2012, 09:55 PM Reply Like
  •  
    DJIA has long since abandoned its usefulness as an 'industrial' barometer with the addition of finance and insurance companies (American Express, Bank of America, Travellers, and United Healthcare). Years ago they should have developed a DJFI to account for financially oriented companies rather than contaminating the DJIA.
    24 Sep 2012, 08:14 AM Reply Like
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