As the no. 2 company in the U.S. by market cap, Apple (AAPL) would seem to deserve a spot in the...

As the no. 2 company in the U.S. by market cap, Apple (AAPL) would seem to deserve a spot in the DJIA. But its $320 share price would prove a severe distortion, accounting for ~17% of the index. A 1% change in Apple's price would translate to a 23-point change in the Dow, an outsized impact that "would pretty much make the Dow irrelevant."

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Comments (7)
  • hadanlo
    , contributor
    Comments (24) | Send Message
    stock split
    17 Jun 2011, 04:48 PM Reply Like
  • nightfly
    , contributor
    Comments (1015) | Send Message
    The DOW is already irrelevant.
    17 Jun 2011, 04:49 PM Reply Like
  • kmi
    , contributor
    Comments (4598) | Send Message
    Another problem clearly being the speed with which companies grow and collapse in Apple's primary space, smartphones/mobile... Not quite the same thing as a XOM.
    17 Jun 2011, 04:51 PM Reply Like
  • Capt Herlock
    , contributor
    Comments (60) | Send Message
    Plus Apple's product lines are far to narrow to be included as a DOW component. Their core economic reach isn't relevant enough because their entire business model is limited to selling 5 or 6 types of products people don't actually need. Until that changes they will always be a sideshow, no matter how big their market cap gets. A lot different from an XOM.
    17 Jun 2011, 05:02 PM Reply Like
  • The Sane Investor
    , contributor
    Comments (354) | Send Message
    Perfect reason why the DOW is a useless index
    17 Jun 2011, 05:34 PM Reply Like
  • dividend_growth
    , contributor
    Comments (2895) | Send Message
    Tech stocks admitted to Dow in recent years have been nothing but kiss of death for their investors: INTC and MSFT in 1999, CSCO in 2008.
    18 Jun 2011, 02:41 AM Reply Like
  • Chad Brown, CFA
    , contributor
    Comments (132) | Send Message
    Price-weighted methodology was a nice short cut in the 1800s. Since then we have invented machines that can perform the calculations so quickly that hand-calculatons are no longer needed. Ditch the Dow! When companies allow their offerings to become obsolete, the market economy destroys them. Why is an obsolete index still alive? What is insulating it from technology advances?
    18 Jun 2011, 12:07 PM Reply Like
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