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Laszlo Birinyi appeared on CNBC yesterday afternoon to discuss some recent contentions about changing the members of the Dow Jones Industrial Average, and changing investment styles in a new type of market.
The bottom line for the Dow, is that in a price weighted index a stock trading at or around $1 is meaningless. If Citi goes to zero it will only cost the index 8 points. It is time to make significant changes to the index in order to maintain a meaningful representation of US stocks.
DJIA has become outmoded a long time back. You are right, its a price weighted index. S&P 500 or Wilshire 5000 are better barometers of stock market sentiments.
Posted by: Forex Trader | March 13, 2009 at 10:23 AM