Apple Inc. too big for the Dow

“Apple is the world’s most valuable company. The Dow Jones industrial average is probably the world’s best-known stock index,” Christina Rexrode reports for The Associated Press. “So don’t they deserve each other?”

“Consider this: If Apple had been added to the Dow in June 2009, the last time there were serious rumors that it would happen, the average would be about 2,500 points higher than it is today and well above its all-time high,” Rexrode reports. “But if you think the time is right for an Apple-Dow marriage, don’t check your mailbox for a wedding invitation. Apple, which redefined how people listen to music and reinvented the cellphone, is simply too hot for the Dow.”

Rexrode reports, “In 2009, when a bankrupt General Motors and a hobbled Citigroup were booted from the Dow and Apple was talked about as one replacement, Apple stock traded at about $144. On Wednesday, it closed at $569. Because of how the Dow is calculated, Apple would dwarf the other stocks in the average and distort the Dow from its purpose — which is to reflect the broad economy, not represent the hottest stocks… ‘It wouldn’t be the Dow Jones industrial average,’ says Nicholas Colas, chief market strategist at ConvergEx Group. ‘It would be the Apple Plus Some Other Stuff Index.'”

Read more in the full article here.

Related articles:
Chicago Board Options Exchange sees possible Apple index in VIX expansion – May 10, 2012
Barron’s: Apple deserves to be in the Dow – April 30, 2012
Apple Inc: Just way too expensive for the Dow – September 20, 2011


    1. More so, why every evening, every radio and TV station quotes the Dow and the NASDAQ, but ignores the S&P 500; the S&P, of all the most major indices, best reflects the broader market.

    2. Same here. It’s stuffed full of old guard safe bets for pension schemes to consider investing in. It doesn’t include the innovators, those companies that will drive an economy forward.

  1. Dow is a crap measurement tool. It does a poor job of economic reflection due to the way it weights (or more aptly, doesn’t weight) stocks. It’s “usefulness” is only in its familiarity. If your financial advisor is still using it to sell you stocks, run away.

  2. Excuse me? Apple is NOT part of the overall economy? Where does it operate? On an island, unique unto itself? Isolated from everything, not contributing to the economy? Surely you jest! Perhaps if Apple WERE part of the DOW, the other “some other stuff” in the index would see how much they need to step up their game and start competing again!

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