• 520 days Will The ECB Continue To Hike Rates?
  • 521 days Forbes: Aramco Remains Largest Company In The Middle East
  • 522 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 922 days Could Crypto Overtake Traditional Investment?
  • 927 days Americans Still Quitting Jobs At Record Pace
  • 929 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 932 days Is The Dollar Too Strong?
  • 932 days Big Tech Disappoints Investors on Earnings Calls
  • 933 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 935 days China Is Quietly Trying To Distance Itself From Russia
  • 935 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 939 days Crypto Investors Won Big In 2021
  • 939 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 940 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 942 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 943 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 946 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 947 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 947 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 949 days Are NFTs About To Take Over Gaming?
The Mogambo Guru

The Mogambo Guru

Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo…

Contact Author

  1. Home
  2. Markets
  3. Other

The Mysterious Omen that is 'Divisor Change'

In Barron's this week, they had a big notice, labeled "Divisor Change" pasted onto the chart of the Dow Jones Industrials Average, which leads off their Market Laboratory section.

The notice was necessary since General Motors and Citigroup were taken out of the DJI index, while Cisco Systems and Travelers were added, and a difference in their capitalizations means that there must be a divisor change so that the index itself would not change as a result of the substitution. The new divisor is 0.132319125, which is different than the old divisor, which was 0.125552709.

This is all, as you probably surmised, completely incomprehensible and meaningless to me, except as ammunition for the next time when somebody comes right up to my face and tells me, "Shut up! I am sick to death of hearing that stocks are overpriced crap, that bonds are overpriced crap, that houses are overpriced crap; and I am especially sick of hearing that everyone is out to get you because it is probably for good reason, and I will probably lose my freaking mind the next time I hear you say that I must immediately sell everything to buy gold, silver and oil or it proves that I am some kind of stupid guy or something! So shut up, shut up, shut up, you Irritating Little Man (ILM)!"

Now, instead of crying like a little wuss because my feelings are hurt, I can say in clever rebuttal, "Oh, yeah? Well, you ARE a stupid guy who probably doesn't even know that the divisor of the Dow Jones Industrial Average changed to 0.132319125 from 0.125552709! And it is this ignorance, plus your natural stupidity, that completely explains why you will not buy gold, silver and oil, even when the entire history of economic man says that this is the only prudent thing to do, which, to be fair, is only examining the economic history of the world for the last couple of billion years, ever since that long-forgotten day when, suddenly, there was one one-celled organism floating around in some primordial goo, which soon got bored and replicated itself so that then there were TWO one-celled organisms, whereupon the first one-celled organism asks the other one, 'Hey! Loan me some money!' and the second one says, 'What's money?'

"And it is THAT kind of 'Immortal Lessons Of History (ILOH)' that you so cavalierly dismiss, you moron, which is why you will die a slow, agonizing death of ruination and deprivation, with you and everyone you love wallowing in abject misery and poverty, all of them crying out in their pain and despair, asking you, 'Why didn't you buy gold, silver and oil when The Mogambo told you to? Two billion years of history is not good enough for you, you moron?'"

So I had dismissed the whole divisor change thing as just another of life mysterious unknowable that I can perhaps use to my advantage one day, but of no immediate import.

That is, until I got to their table showing the earnings of the DJIA suddenly went from a paltry $198.96 last week and the earnings yield being a low, low 2.27%, to a suddenly robust earnings of $686.52, generating an earnings yield of a mighty 7.80% this week! Wow!

Now, I am not saying that the two are related, mostly because I don't have any facts or inclination to find out because I am sure that it is all just a big scam anyway, but something BIG suddenly happened.

And big things happening is always a bad omen, unless you are looking for an omen to buy gold, silver and oil as protection against fiscal insanity, and monetary insanity, and the insanity of the government's Plunge Protection Team meddling in the markets, making it all so, so much worse.

In that case, it's an omen that makes you giggle, "Whee! This investing stuff is easy!"

 

Back to homepage

Leave a comment

Leave a comment