Changes to the Dow, S&P 500

[Surefire]

Kraft replaces AIG in the DOW, effective Sep 2008. This move makes sense given that AIG is now a penny stock, and has a bleak future.

FLIR joins the S&P 500 effective 1/1/2009. I'm happy to see FLIR continue to move up. When I first bought FLIR, it was a true small cap and on the S&P 600 index. I think it is still too small of a company to be considered large (it probably should have been kept on the mid cap S&P 400 a little longer), but this company IMO is solid and I'm excited about future prospects.

I wonder if we will see GM taken off the DOW soon. It has fallen into the penny stock category, and there are probably better choices to replace it.

 

[Holdfast]

How often does the Dow reshuffle its components?

The FTSE recalculates which companies should be components on a quarterly basis on market cap basis. It's pretty ruthless, but it works well. The Dow seems to shuffle much more intermittently? I can't say I've ever looked this up.

 

[Surefire]

How often does the Dow reshuffle its components?

The FTSE recalculates which companies should be components on a quarterly basis on market cap basis. It's pretty ruthless, but it works well. The Dow seems to shuffle much more intermittently? I can't say I've ever looked this up.

It seems to be done on an as needed basis.

http://en.wikipedia.org/wiki/Historical_components_of_the_Dow_Jones_Industrial_Average

 

[Holdfast]

Yeah, I looked that up before asking, but it doesn't say whether those were just the times the components actually changed (ie whether there were other regular reviews in between where no change was necessary).

 

[Kryton]

All they have is 30 industrials to base it on. One dies, they have to put another in its place.

It's not common, but every handful of years something happens (Enron was one such, IIRC).

 

[Surefire]

I know this is unlikely, but I'd like to see them put Toyota in place of GM. This would keep an auto industry representative in the DOW, but put one of the better car companies in this index. Even with the bail out, I think GM is dead.

The bottleneck I believe is that the DOW has traditionally been US companies. OTOH, Toyota does produce cars in this country, and employees US work force, so I can see both sides of the issue.