“Apple Inc, the largest U.S. company by market value, will join the Dow Jones industrial average, replacing AT&T Inc., in a change that reflects the dominant position of the iPhone maker in the U.S. consumer economy,” David Gaffen reports for Reuters. “‘This is a sign of the times, and it might get everyone to look at the Dow more than they have been,’ said Richard Sichel, who oversees $2 billion as chief investment officer at Philadelphia Trust Co. ‘It would be difficult to pick any 30 companies that would cover the entire economy, especially compared with the S&P 500, but it does give the Dow more credibility.'”
“Even though professional managers generally benchmark against the S&P 500, additions and removals from the Dow are still a big event on Wall Street. It was last altered in September 2013 when Goldman Sachs Group Inc, Visa Inc and Nike Inc were added,” Gaffen reports. “Kevin Landis, chief investment officer of Firsthand Capital Management, a Silicon Valley-based technology-investing specialist with $300 million in assets under management, said he hopes that this is not a sign that Apple is past its prime. ‘The Dow Jones is such a backwards-looking list, I cringed when Intel and Microsoft were added,’ Landis said. ‘I’m cringing today. Let’s hope Apple can defy the forces of history.'”
Read more in the full article here.
MacDailyNews Take: Apple’s business and future potential are far stronger than Intel or Microsoft’s ever were. Using other companies’ performance to predict others’ after hitting the Dow is like using the 1954 Tigers to predict the performance of the 2015 Red Sox. Meaningless.
In Apple’s case, the Dow is actually ahead of the curve.
Related article:
Apple to join the Dow Jones Industrial Average – March 6, 2015
The big risk is the future usefulness of the DJIA. The largest company in history doesn’t seem a good choice to understand “average”. Now if it was the Dow Jobs Industrial Outstanding that might be something.
I am cringing because Kevin Landis, chief investment officer of Firsthand Capital Management, appears to be emotionally attached to history. I hope that Mr. Landis uses more rational criteria when analyzing investments for his company. Otherwise, that $300M in assets under management might end up rapidly shrinking in coming years.
Can”t resist One phone (landline) for another, iPhone–air) as Apple replaces ATT. But, still a phone. smiling.
mizzou