MacDailyNews Take: Apple irrevocably changed the personal computer industry, too. Three times, so far (Apple II, Macintosh, and iPad).
La Monica continues, “As a result, Apple’s market value is now about $245 billion. That’s larger than 28 of the 30 Dow components. Only Exxon Mobil and Microsoft are worth more. And the gap between Apple and Microsoft is shrinking fast — Microsoft’s market value is approximately $270 billion.”
La Monica writes, “I’ve suggested that Apple could be a candidate to join the Dow in numerous columns over the past few years in which I called for GM, AIG and Citigroup to be kicked out. (They all are now former Dow members by the way.) But now more than ever, Apple merits serious consideration.”
Full article – recommended – here.
Joining the Dow would help anyone that has AAPL stock since it would force all the index funds that follow the Dow to immediately buy large amounts of AAPL. Great for the stock price.
Obviously. What more does Apple need to do?
Being added should increase AAPL stock price even more, because many index-based funds will then be required to have it in their portfolios. Sell whatever stock got kicked out to make room for AAPL and buy some AAPL.
@NYC Doc,
Is that the only advantage of joining DOW? I’ve always wondered what’s the difference in being listed by NASDAQ or DOW. Chime in, anyone. Thanks.
Someone please explain what it means to ‘join the DOW’ as opposed to being listed in the stock exchange.
And—if you’re feeling especially helpful—what’s the difference between market cap and market value?
I’ve never owned stock and dats why I’m ignernt and plus doing the google is hard.
It’s my understanding all the companies making up the Dow are on the New York Stock Exchange. Apple is on NASDAQ. I don’t know if NYSE affiliation is a rule, but adding AAPL to the Dow will only distort the index as it’s hardly representative of the typical large corporation. Those who see the index as reflecting corporate or economic health will thus get a false picture.
@JoeMac: DOW is not a stock market. NASDAQ (like NYSE) is.
DOW is an index.
NASDAQ is both a (fully electronic) stock market and an index.
Apple needs to finally be inducted into the ‘Big Boys Club’.
It’s time to do so….
As I understand it, you can’t really “join” the DOW any more than you can “join” the Hall of Fame for a given sport. You have to be deemed worthy by the folks who manage the fund, and then they simply include your stock in the fund. I’m not even sure the company in question really has a say.
I could be wrong – anyone actually know this actually works?
as Apple gets closer to passing Microsoft, I believe more people will continue to buy just to get past them and leave them behind as #3 Then next stop is #1 passing Exxon.. it will happen.. just takes time 😀
I would say that Apple has changed the computer industry 4 times. Slip iPhone in there between Mac and iPad.
The bit about graphic designers is a nice digg at Adobe, something they seem to have missed.
There are very many different indices out there, representing all kind of industries. DJIA (Dow Jones Industrial Average), S&P500;(Standard & Poor 500) and NASDAQ Composite are by far the most commonly quoted. An index, such as these three, is essentially a compendium of stocks that represent certain type of companies. DJIA (the DOW) is the index that represents 30 most powerful companies in the US, from various industries. S&P;500 represents an average value of some 500 companies, while NASDAQ Composite represents ALL stocks and derivatives traded on the NASDAQ stock market (some 3,000 various financial instruments). Companies that are included in DJIA do NOT have to be traded on the NYSE (some are traded on NASDAQ).
When AAPL was included in a smaller S&P;index several years ago, its value jumped by almost 10%. This is because many investment portfolios and mutual funds have definitions in their regulations that require a specific percentage of the portfolio to contain stocks from a specific index. Large numbers of these investment products have Dow Jones Industrial Average as one of their components. As these indices add or remove companies, all of these investment companies adjust their portfolios to reflect changes in the indices. If DJIA added AAPL, there would be a massive buy-in into AAPL, not because some investment analysts are speculating that this would be a smart move, but because financial companies would simply be required to buy AAPL, due to their portfolio rules.
Was this a reasonable explanation?
Conversely, if a stock is dumped from DOW (like Citi, AIG, GE), the stock immediately drops by at least 15%, for the same reason (large funds dumping it to make sure the portfolios that are tied to an index are correctly represented).
I don’t think there is a single negative consequence of AAPL being added to DOW.
“The Dow” is short for “The Dow Jones Index of 30 Industrials”, one of the earliest and still the most popular measure of the performance of the stock market. That’s the number you hear every day on the news. The index is named for its originator, publisher Dow Jones, then of the Wall Street Journal.
My understanding is that “the stock market” doesn’t necessarily mean the NYSE. I believe that at least one NASDAQ stock was added to the index at some point, but my memory’s failing me. It was a big deal when it happened. I think it was during the dot.com boom.
The silly thing about the index is that it’s utterly unnecessary these days, yet remains in place through sheer unstoppable inertia. The Dow index was first created in a time long before computers, when indexing the entire market would have been impractical. Instead, they selected 30 stocks to serve as a measure of the entire market. These days, of course, indexing the entire market is trivial, and there is an index of the entire market. But the old-fashioned Dow index remains the most influential number.
——RM
There are (at least) three NASDAQ companies in the Dow Jones index:
Inetl (INTC)
Microsoft (MSFT), and the most recent entry,
Cisco (CSCO)
And yes; looking at the companies currently on the index, Apple surely must be included. The only question is, who will be kicked out?
This would be a good place to start for those of you wanting to learn more about what this sort of thing means:
http://www.investopedia.com/
“from being a niche maker of computers favored mostly by graphics designers and college kids”
Who did they think those college kids would grow up to be?
Predrag and LordRobin
Thank you!
Of course, as a shareholder I’d like to see Apple added to the Dow; however, the Index is supposed to be representative of industry, not just the biggest companies. Technology is already represented by Cisco, HP, Intel, IBM, and Microsoft. And, Cisco was only just added last year, as GM and Citibank were knocked out.
In general, someone has to be knocked out, before someone is added. I’m not sure, any of the current companies in the Index are at risk of getting knocked out.
As soon as Exxon starts paying for carbon credits Apple will be in first place in no time.
I say, the best candidate to go would be HP. In the sense that Apple is representative of (among others) the desktop computing industry, it would certainly represent it better than HP.
6 times
You forgot the PowerBook- the first real laptop.
You forgot the iBook- the first consumer laptop.
You forgot the Newton- the first PDA.
LOL, Apple bigger than 28 on the current list on DOW.
The guys in DOW are also watching porn whilst this is happening, on the android.
The Dow Jones Industrial Average is considered in professional circles to be a quaint old concept that is no longer state of the art. And besides, Rupert Murdoch’s News Corp owns Dow Jones, making them well worth ignoring.
The S&P;500 (Standard and Poors 500) has been considered the best market indicator for many decades.
S&P;500
Apparently there aren’t a lot of geek investors in this thread. Some of what was posted is accurate, but there were enough errors to leave mis-impressions.
First, a stock index is a “market basket of stocks” designed to be representative of some interesting fraction of 1 or more (sometimes many) stock markets. These indexes can be constructed in many ways.
One is made up of companies picked by a committee which uses their sense of which will make their index useful. The Dow Jones is one of these. It’s 30 huge companies – but NOT the 30 largest companies. And it is made up of companies that the Dow Jones Co. feel are representative of the stock market (at least the large company part) as a whole for whatever reasons they choose. It includes companies in different economic sectors (e.g., financial, manufacturing, technology, retailing, entertainment, transportation, etc.).
The DJIA (Dow Jones Industrial Average) is NOT a “fund” as was said. It is a BAROMETER representing fluctuation in the value of the companies in the index and companies like them, and more.
DJ does not buy shares in its own index, and you can’t buy it from them as a mutual fund. A variety of funds, however, some marketed under the Dow Jones name track some of its components/sectors, and closely approximate its performance. Changes to the Dow chosen companies are made slowly and in secret.
Another DJ index is very different, e.g., Dow Jones Total Stock Market Index represents the stocks of nearly every publicly traded company in the US
The Nasdaq is a stock exchange listing many stocks (companies apply to be listed on an exchange and there are a number of them), mostly of smaller companies but including some tech giants (which started as small Nasdaq companies). The Nasdaq Index combines the performance of its components. The Nasdaq QQQ Index represents the 100 largest companies in the Nasdaq.
The S&P;is not a stock exchange. The major US stock exchanges are the NYSE (New York Stock Exchange, the grandaddy and home of most of the Dow companies), the upstart NASDAQ, and the diminished American Stock Exchange. This doesn’t include other securities exchanges which handle industrial and agricultural commodities, precious metals, bonds and more.
S&P;(Standard and Poors) is a company which gathers and publishes information about markets and companies, has many indexes, and also, for example, rates bonds.
Somewhat true: “S&P;500 represents an average value of some 500 companies.” Corrections: 1, It’s not “some 500 companies” but the largest 500 companies listed on US exchanges. 2. It’s not the companies “average value,” because the S&P;500 is MARKET-WEIGHTED, so the top 50 companies make up by far the greatest portion. Not all arbitrary indexes are market-weighted and there are advantages and disadvantages to all methods.
You can buy shares in an index fund which mimics the S&P;500 from many companies. These are probably the most commonly held investments of most people who own stocks in the form of mutual funds, or their newer cousins, ETF’s (electronically traded funds).
There are 100’s and maybe 1000’s of indexes measuring different parts of different markets around the world. Indexes of middle size companies (like Apple was not so long ago). Of small corporations (like Apple in the height of the Apple II era). Of “Micro-cap” companies – the smallest 5% of companies listed, just to name three.
To correct another post, the DJ is certainly the most commonly reported stock index, but is not necessarily the most influential in the investment worlds. Professionals use many indices in gauging markets. But while old, it is neither antiquated or irrelevant. Its guardians value its mind share and work to keep it germane as a “proxy” for “the market.”
It would be seen as validating Apple’s amazing rise to be selected (and not good for the company that Apple replaced), but the effect might be short-term. Once all the funds that track the Dow readjust, being in the Dow would just be a fact of life that wouldn’t boost or bring down Apple’s value.
Market cap(italization) by the way (unless I’m having a huge brain fart) is a simple calculation: number of shares of company stock outstanding times the price per share. It doesn’t include bonds or other debts outstanding, unspent cash sitting in the company and other factors which you might think of as effecting its “market value.”
For more info I recommend the educational materials (and funds) at Vanguard.com which are the lowest cost funds to own. For more info about what stock indexes are and many other factors I won’t bore you further with, see:
http://en.wikipedia.org/wiki/Stock_market_index
Hope this helps, campers.