Sunday, September 1, 2013

Dow Jones Index Needs a Shuffle to take Average to 20,000

Dow Jones Index Needs a Shuffle to take Average to 20,000

A year ago United Health Group, Inc. (NYSE: UNH) was added to the Dow Jones Industrial Index (DJIA) to replace Kraft Food, Inc, after Kraft’s plans to spin off its American grocery business. Although UNH only accounted for approximately 3% of the index‘s weighted average, the stock’s 29.6% return was the 4th best stock performer of the 30 stocks in the index contributing to the average’s gain of 9.06% since being added through to yesterday’s close. Below is the performance of the Dow Jones Industrial Average and the 30 components since UNH was added on September 24, 2012. (Clicking on the Corporations’ names are links to Stockdiagnostics.com Charts of each stock through the date of the change on September 2012).


Ticker Company 9/21/12 8/30/13 % return
BAC Bank of America $9.09 $14.12 55.34%
BA Boeing Co. $68.43 $103.92 51.86%
HPQ Hewlett-Packard $17.21 $22.34 29.81%
UNH UnitedHealth Group Inc. $55.50 $71.74 29.26%
JNJ Johnson & Johnson $66.90 $86.41 29.16%
HD Home Depot Inc. $58.54 $74.49 27.25%
CSCO Cisco Systems Inc. $18.34 $23.31 27.10%
JPM JPMorgan Chase $39.76 $50.53 27.09%
UTX United Technologies Corp. $78.87 $100.10 26.92%
AXP American Express Co. $57.11 $71.91 25.91%
MMM 3M Co. $91.00 $113.58 24.81%
PFE Pfizer Inc. $23.70 $28.21 19.03%
TRV Travelers Cos. $67.39 $79.90 18.56%
DIS Walt Disney Co. $51.94 $60.83 17.12%
PG Procter & Gamble Co. $67.30 $77.89 15.74%
DD E.I. DuPont de Nemours $50.03 $56.62 13.17%
MSFT Microsoft Corp. $30.25 $33.40 10.41%
DJIA Dow Jones Indust Ave 13,579.47 14,810.31 9.06%
VZ Verizon Communications $43.72 $47.38 8.37%
MRK Merck & Co. Inc. $43.66 $47.29 8.31%
CVX Chevron $114.02 $120.43 5.62%
GE General Electric Co. $21.97 $23.14 5.33%
MCD McDonald's Corp. $91.42 $94.36 3.22%
KO Coca-Cola Co. $37.24 $38.18 2.52%
WMT Wal-Mart Stores Inc. $72.68 $72.98 0.41%
INTC Intel Corp. $22.22 $21.98 -1.08%
XOM Exxon Mobil $89.53 $87.16 -2.65%
T AT&T $36.26 $33.83 -6.70%
CAT Caterpillar Inc. $89.45 $82.54 -7.72%
IBM Internat'l Bus Machines  $202.26 $182.27 -9.88%
AA Alcoa Inc. $9.00 $7.70 -14.40%
KFT Kraft Foods $51.93


Since Being added to DJIA, Bank of America is Down 63% 

Although Bank of America (NYSE: BAC) was the top performing stock in the chart above with a 55% return, shares are still 63.54% lower since being added to the Dow Jones Industrial Index on February 19,2008.  Chevron was also added to the index on the same day as Bank of America and CVX shares are 73.38% higher. Since the stocks were added to the DJIA the index has gained 19.94%.

Prior to United Health Group being added to the Dow Jones Index, the last change to the index was made on the opening of June 8, 2009 with the addition of Cisco System (NASDAQ: CSCO) and Traveler Cos. (NYSE: TRV). Since the 2009 change Cisco has gained 23.66% and Travelers is up 105.03%, while the DJIA is 69.01% higher.

Today’s Dow Jones Industrial index has changed significantly since its inception to adapt to the changing landscape of America. Alcoa (NYSE: AA), Caterpillar (NYSE: CAT) and Hewlett-Packard (NYSE: HPQ) are no longer considered leaders in today’s market place and although HPQ stock has performed well of late, the stock performance is not indicative of the underlying business’s future growth. Its time for companies, Google (NASDAQ: GOOG), Apple (NASDAQ: AAPL) and Wells Fargo (WFC), that dominate the marketplace and the world economy to be added to the index to help get the index to 20,000 and beyond.





3 comments:

  1. Thanks Rocco.
    the timing was great.
    My crystal ball was pretty good. lol

    ReplyDelete
  2. this morning Dow Jones broke 17,000.


    It could have got here quicker if it had not made the changes that were made on September 23,2013.

    Dow since September 23,2013 open when 3 additions and 3 removals were made has moved from 15,451 to 17.000 for a neat 10% gain in 10 months.


    Since Dow added $GS $NKE $V and removed $AA $HPQ $BAC


    GS has gone from $163.60 to $169.43 +3.5%
    NKE has gone from $68.72 to $78.40 +14%
    $V has moved from $197.70 to $216.34 +9.4%


    $AA has since gained 83% $8.21 to $15.02
    $HPQ has gained 63% moving from $20.89 to $34.03
    $BAC is up 14% $14.11 to $16.08

    ReplyDelete