Reuters: Is it Time to Overhaul the Dow?
If you follow the blog for any period of time you will see I almost never reference the Dow Jones Industrial Average; instead focusing on the broader S&P 500. The Dow is only 30 stocks and unlike most logical indexes is price weighted; which means a stock that trades at $80 is 8x more important than one that trades at $10. If the Dow was equal weighted - the demolition of Bank of America (BAC) and Citigroup (C) would have had a much larger effect.
An interesting take,
via Reuters on the need for overhaul.
- There was a time when a tumble below $10 in the share price of a company in the Dow Jones industrial average (DJI:^DJI - News) meant ignominy. Now, after vertiginous stock market falls in recent months, five of the venerable index's 30 components are trading under that price, including its two oldest members, conglomerate General Electric (NYSE:GE - News) and automaker General Motors (NYSE:GM - News).
- Citigroup (NYSE:C - News) stock plunged below $2 on Friday, making it cheaper than a medium cup of coffee at Starbucks.
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