Apple Joins Dow Jones Substituting AT&T
As from March 19th, the largest United States market valued firm, Apple will be part of the Dow Jones Industrial Average. Apple will be substituting AT&T that has been on the United States barometer of the stock market for almost a century now.
Even though Apple is amongst the top performing companies in the United Stated, its great price of stock prevented it from being part of Dow Jones – this was done to safeguard the index which is price weighted. However, Apple company now has an opportunity to join now, because of the recent adjustment made to Visa shares format.
The sector of information technology weight will be lowered in the total index by dividing visa shares four for one, this will commence from March 18. S&P Dow Jones Indices chairman of Index, David Blitzer said – “As the largest corporation in the world and a leader in technology, Apple is the clear choice for the Dow Jones Industrial Average”.
The Dow Divisor is an important element used to determine the Dow’s average, and the process involves an average calculation with the Dow’s divisor as the denominator and the numerator is the sum of Dow’s 30 share prices. This divisor’s format is often changed to enhance progress.
Philadelphia Trust’s chief investment officer, Richard Sichel said that Apple joining the Dow Jones “brings the Dow into reality and the 21st Century,” and still speaking he said that “it will make the Dow a more interesting index to watch, but also more volatile since it is replacing a nice, steady old name with an interesting and exciting tech and retail company”.
Firsthand Capital Management’s chief investment officer, Kevin Landis did not think joining the Dow was a good thing for Apple, he said – “The Dow Jones is such a backwards-looking list, I cringed when Intel and Microsoft were added, I’m cringing today. Let’s hope Apple can defy the forces of history.”
Mr Kevin Landis thinks this way because after Intel and Microsoft joined the average in 1999, their output was lesser in the years that followed.