FR: 7 Stocks the Dow has Liked For a Long Time

Article: 7 Stocks the Dow has Liked For a Long Time

My final “Fool Revisited” piece for today was the first article I wrote about the Dow Jones Industrial Average (^DJI). I definitely have a love/hate relationship with this particular index – it’s an arbitrary list of 30 companies picked by the folks in charge, weighted by price and not market cap – and it is talked about WAY TOO MUCH in the financial media when it passes certain big numbers. I wrote about when it went past 20,000 last February (it’s currently just a tad under 25,000) and it’s just a stupid measure if you care about what the “stock market” is.

The love part of the relationship comes from the fact that I was able to generate some content of this arbitrary list of companies. And this article was the first of many where the Fool tried to take advantage of “tickering” the index so that they got more page views. Not a bad idea, honestly, especially with the wide coverage that the Dow receives nearly every day in the financial press.

For this four part series, which will be covered over the next few weeks in fits and starts, I pretty much ranked the Dow components at the time by the date the were most recently added to the actual index. As the title indicates, this is the list of the seven companies that had been on the Dow the longest as of October 22, 2011, and one of the seven (Alcoa (NYSE: AA)) was replaced in 2013 (after I stopped writing for the Fool, or otherwise there might be an article about it). Each company’s performance since that day through February 16, 2018:

Stock Start Price End Price CAGR Total Growth Value of $10,000
General Electric (NYSE: GE) $13.30 $15.05 1.97% 13.16% $11,316
ExxonMobil (NYSE: XOM) $66.15 $76.54 2.33% 15.71% $11,571
Procter & Gamble (NYSE: PG) $54.78 $82.60 6.71% 50.78% $15,078
DowDuPont (NYSE: DWDP) $25.39 $71.95 17.90% 183.38% $28,338
United Technologies (NYSE: UTX) $65.11 $129.26 11.45% 98.53% $19,853
Alcoa $23.09 $47.36 12.03% 105.11% $20,511
3M Company (NYSE: MMM) $68.89 $236.67 21.54% 243.55% $34,355
S&P 500 $1,238.25 $2,732.22 13.35% 120.65% $22,065

Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits

I find it ironic that the company removed from the index had the third best performance in the meantime. And the predictions that General Electric might be removed from the index – an original member! – now because of a low stock price and poor stock performance really point to the overall ridiculousness of the Dow jones Industrial Index in the first place. I’ve said it many times before, but a purely market cap-weighted index like the S&P 500 is probably your best representation of “the markets,” not some garbage index that has long stopped tracking the companies that define “industrials” in the United States.

I really hate the Dow Jones Industrial Average.

Until next time…

Disclaimer: I do not own currently own shares in any of the mentioned companies, and I have no plans to purchase shares of either company within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.

3 thoughts on “FR: 7 Stocks the Dow has Liked For a Long Time

  1. Pingback: FR: How the Dow’s Latest Picks Have Fared | Trying Too Hard: A Blog

  2. Pingback: FR: Decades of Great Performance from 9 Dow Stocks | Trying Too Hard: A Blog

  3. Pingback: FR: A Decade of performance from 7 Dow Stocks | Trying Too Hard: A Blog

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