Thom Calandra wrote an article Thursday on the makeup of the Dow Jones Industrial Average. Mr. Calandra pointed out that the Dow Jones Industrial Index is price weighted as opposed to Market Cap weighted like most popular indices. Due to this quirky index methodology 3M and Procter Gamble affect the Dow index more than is popularly understood. I thought it would be interesting to show the 30 Dow components ranked by Dow weighting. So here they are:
Asof Sept 19th at 4 PM ESTAs long as we are looking at the Dow Components I think it is also interesting to point out the earnings growth estimates that need to be met in order to prevent more disasters like IBM and JPM had this week. Some of the predictions look pretty darn optimistic if you ask me. Are the Dow companies really going to grow earnings by over 20% in the coming year?
It also just so happens that (MMM and PG) have held up much better over the past two years than most of the other stocks in the Dow.
Take a look at 3M:
...and Procter & Gamble:
This has caused more than one conspiracy nut to wonder why these two stocks have held up so well. Could it be that somebody is trying to prop the Dow up to make things look better than they really are? Of course, I don't know, but I do know that many people will judge the entire coming 12 months stock market performance based on these two stocks.
