“Who says Apple does not want to be in the Dow Jones industrial average?” David Gaffen asks for Reuters. “The iPhone maker’s market value has stood high above most U.S. corporations’ for a few years, yet Apple still isn’t a component of that blue-chip stock benchmark. That is because the Dow weighs its 30 components by price, so a $500 stock would overwhelm the index.”
“A seven-for-one stock split that will chop the price to about $75 changes the picture. Apple stunned the market with that announcement when reporting earnings on Thursday, and the change seems to increase the chance that the stock will be added to the index,” Gaffen reports. “‘I would think it would likely make it a Dow contender,’ said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago, who owns the stock. ‘Certainly previously it was not a candidate.'”
“The exclusion of the largest U.S. company is odd, since the 118-year-old stock average’s stated purpose is to provide ‘a clear, straightforward view of the stock market and, by extension, the U.S. economy,’ according to the S&P Dow Jones Indices website,” Gaffen reports. “That said, some investors do not think the company is doing this to entice the S&P Dow Jones Indices. ‘I don’t think they targeted the Dow. I’d be surprised, although it’s fairly possible. But I don’t think many companies think about that. Certainly not a tech company,’ said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.”
Gaffen reports, “Of course, letting Apple in means another stock in the sector is likely to be replaced. That could mean one of the other tech behemoths – Microsoft Corp, Intel Corp or Cisco Systems Inc.”
Read more in the full article here.
MacDailyNews Take: Who says Apple does not want to be in the Dow Jones industrial average? We do.
If it happens, it would be a byproduct, not Apple’s goal.
Of course, the karmic symmetry of Apple replacing Microsoft in the Dow would risk provoking an epic flood of schadenfreude throughout the palatial halls of MacDailyNews’ headquarters. Oh, let it be, let it be!
[Thanks to MacDailyNews Reader “David E.” for the heads up.]
Related articles:
Amidst economic doldrums, Apple’s market value hits all-time record; surpasses Microsoft’s set during 1999 bubble – August 21, 2012
Apple’s iPhone now worth more than all of Microsoft Corporation – August 19, 2012
Apple surpasses Microsoft to become world’s biggest tech company, second-most-valuable U.S. company – May 26, 2010
Apple still shouldn’t be in the DJIA. It’s an outlier and outperformer, and including it in the average would give an unrealistic picture of the economy as a whole.
-jcr
Ballmer certainly did a great job as CEO of M¢. Now, if the Korean copier would hire him.
Could you explain why including the most valuable company in the US would give an unrealistic view of the economy?
Also, there are many funds tied to the DJIA so it could result in more funds investing.
Absolutely. Ownership will become much broader, and hopefully, will result in less volatility (manipulation) of Apple share price by hedge funds and speculators (soros, Ichan).
Yay! Options contracts will be more affordable!
That’s one thing I have been saying for quite a while now.
I remember. It took me a little while to get it but when I couldn’t afford as many contracts as I wanted, I realized the wisdom.
Yes, back in April 2007 I bought 10 AAPL Jan 2008 LEAP contracts with a strike price of $150 for about $1 per share. The stock price was just under $100. In December 2007 the stock price hit $200. I suddenly had $50K profit on a $1000 investment.
These days, LEAPs that are $50 out of the money are prohibitively expensive at $20 per share, when you consider that if they expire while the stock price is under the strike price they are worthless. That’s potentially flushing $2000 down the toilet for 1 contract. At least common shares still have some value, even if the stock price drops.
Hah! Indeed!
+1 on the MDN comment.
Funny as hell.
Totally. MDN doesn’t usually quote the Beatles.
there will be an antler ..
Stock is down $7 bucks – will somebody please explain what all the celebration is about in the MDN world. The rest of the world sees today’s big Apple Inc. news items with a shrug and ho-hum. That’s all we get in the Tim Cook darkness.
Check the after hours trading “Jay.”
It was down during the day prior to the announcements. Based on the clueless pundits’ bashing of Apple and the idiots that believe them. Shortly after the post-trading hour Apple announcement, the shares went up 7.5%.
Good article.
http://www.commdiginews.com/business-2/after-hours-shocker-massive-apple-stock-split-earnings-beat-15831/
Excuse me. It was up 8.26% after hours.
Please, keep your head forever up your ass, where it’s comfortably in it’s natural habitat and stench.
Earnings are reported after the market closes, numb nuts.
-jcr
Good grief! You’re an even bigger idiot than we thought. Congratulations!
That’s it? People have been touting your name over the last day at the numerous headlines, heck I’ve one of them and that’s you comment…
Sorry, you aren’t the rest of the world, you just a broken record experiencing dissociative cognizance. Nothing Tim Cook will do or ever do will make you happy, not even leaving Apple, you’ll go on lamenting and whining in your obsessive compulsive way EXCEPT when you die. Then the rest of the world won’t have to put up with your chicken little sky is falling on the head attitude.
Real question: what would be the value of being in the Dow? How would that help Apple? Is it merely that lots of people buy Index Funds so Apple automatically gets bought more frequently than otherwise? If so, why would the same not be true for the NASDAQ? Are there somehow other benefits?
It might slow down the rampant manipulation with the Dow sucking up a lot of well cared for Apple stock.
Outperformer? Since when? Compared to what average?