“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.]
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