A Changing of the Guard

  1. This past Tuesday was a sad day in the world of Finance.

It was announced on that day that General Electric would be removed from the Dow Jones Industrial Average, effective June 26. On that date Walgreens will take the place of GE as one of the 30 companies which comprise the venerable Dow Jones Industrial Average.

GE was the last member of  the original 12 companies that were included in the average when it was introduced in May, 1896. For the next few years it fluctuated in and out of the index, finally becoming a permanent part of the index in 1901. As such, it is also the longest continuing member of the “club”. Once GE is replaced, Exxon Mobil will be the longest serving member of the Index, having been part of it since 1929.

Here were the original 12 members of the Dow Jones Average:

  • American Cotton Oil Company, a predecessor company to Bestfoods, now part of Unilever.
  • American Sugar Company, became Domino Sugar in 1900, now Domino Foods, Inc.
  • American Tobacco Company, broken up in a 1911 antitrust action.
  • Chicago Gas Company, bought by Peoples Gas Light in 1897, now an operating subsidiary of Integrys Energy Group.
  • Distilling & Cattle Feeding Company, now Millennium Chemicals, formerly a division of LyondellBasell, the latter of which recently emerged from Chapter 11 bankruptcy.
  • General Electric
  • Laclede Gas Company, still in operation as Spire Inc, removed from the Dow Jones Industrial Average in 1899.
  • National Lead Company, now NL Industries, removed from the Dow Jones Industrial Average in 1916.
  • North American Company, an electric utility holding company, broken up by the U.S. Securities and Exchange Commission (SEC) in 1946.
  • Tennessee Coal, Iron and Railroad Company in Birmingham, Alabama, bought by U.S. Steel in 1907; U.S. Steel was removed from the Dow Jones Industrial Average in 1991.
  • U.S. Leather Company, dissolved in 1952.
  • United States Rubber Company

Don’t recognize any of those names? Well here’s the list today, in alphabetic order, including replacing General Electric with Walgreen’s.

–  3M (MMM)

— American Express (AXP)

— Apple (AAPL​)

— Boeing (BA)

— Caterpillar (CAT)

— Chevron (CVX)

— Cisco (CSCO​)

— Coca-Cola (KO)

— Disney (DIS)

— DowDuPont Inc (DWDP)

— Exxon Mobil (XOM)

— General Electric (GE)

— Goldman Sachs (GS)

— Home Depot (HD)

— IBM (IBM)

— Intel (INTC​)

— Johnson & Johnson (JNJ)

— JPMorgan Chase (JPM)

— McDonald’s (MCD)

— Merck (MRK)

— Microsoft (MSFT​)

— Nike (NKE)

— Pfizer (PFE)

— Procter & Gamble (PG)

— Travelers Companies Inc (TRV)

— United Technologies (UTX)

— United Health (UNH)

— Verizon (VZ)

— Visa (V)

— Walmart (WMT)

So I was sad to see it go; it remained a key link between the past and the future.

At one point, around 2000, GE was one of the world’s largest corporations, topping out with a market cap of  $594 billion. Today, its market cap is $113.

So what happened?

From the Wall Street Journal:

https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average

I guess it’s all part of the natural life cycle of any firm.

And GE appears to be in the waning stages of its useful life cycle.

I wish it the best, and I hope to see it make a comeback on the Dow 30.

P.S. I have no idea what I just wrote above, and if I included any gibberish. my apologies. I think I fell asleep a half-dozen times while writing this post.

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