Apple in the Dow

Apple inc. joins the Dow Jones Industrial average. iDow is what they are calling it. AT&T gets booted out on the 18th of March this year, the telecommunications company has been a part of the Dow since November of 1999. General Electric has been part of the index since 1907, that is continuity for you. There are five other companies that have been part of the index for a lifetime, they are in chronological order (first to last) ExxonMobil (as Standard oil) from 1928, Procter & Gamble from 1932, DuPont from 1935 and United Technologies (previously United Aircraft) from 1939. The most recent entries are Nike, Goldman Sachs and Visa, all from September 2013. Apple is the sole new entrant, see the release: Apple Set to Join the Dow Jones Industrial Average.

The reason is twofold as you can see: The index change was prompted by Visa Inc.'s (NYSE:V) 4:1 stock split which is scheduled to be effective at the same time. The post-split adjusted lower price of Visa will reduce the weighting of the Information Technology sector in the index. Adding Apple to the index will help to partially offset this reduction. And As the largest corporation in the world and a leader in technology, Apple is the clear choice for the Dow Jones Industrial Average, the most recognized stock market measure. Most recognised, chosen however. The S&P 500 is a Market-value weighted index, which means that the higher your market cap, the more important you are. Even though S&P Dow Jones Indices (part of McGraw Hill Financial) may think the Dow is the most important, surely the weighting and voting machine (the broader market S&P 500) is a better measure. In the end it actually makes very little difference, it is another tick of a box I guess. You could argue that they, the folks who set the constituents, are woefully late.