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Matt's Market Insights


Editor's Note

Dear Readers:


Today we are introducing a new occasional feature, Investor Education and Market Insights from our Director of Research, Matthew Kerkhoff. We hope you enjoy it! Richard's Remarks follow.

Daria Doering Russell



The D-J Industrial Average constituents will change next week.


Three of the Dow’s thirty components are being replaced on September 20th, in a move designed to rebalance and refine the heavily followed index. The three companies that will be removed from the Dow are Alcoa (AA), Hewlett-Packard (HPQ) and Bank of America (BAC). These will be replaced by Nike (NKE), Visa (V) and Goldman Sachs (GS).


Many investors are wondering why and how the D-J Industrial Average, perhaps the most widely followed index, can have 10% of its composition abruptly changed. Doesn’t this undermine the value and representation of the Dow? Doesn’t it obscure the relevance of prior and future performance? While the upcoming changes will be the largest shake-up for ... Log in or subscribe to continue reading.

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