GE’s Just Another Word for Nothing Left to Lose
Getting punted from the Dow looks bad but may be a blessing.
This is the first day of the rest of its life.
Photographer: FREDERIC J. BROWN/AFPAs a stock index, the Dow Jones Industrial Average is dumb. It’s just 30 stocks, and it’s weighted by price, so companies with relatively small market valuations but high prices dominate. In the Dow’s Bizarro World, for example, Boeing (worth $200 billion) is nearly twice as important as Apple (worth $917 billion).
But as a signaling device, the Dow matters. Though the S&P 500 is a far more sensible representative of the U.S. stock market, the Dow is the one everybody knows. It's an exclusive club of America’s most “important” companies. General Electric Co. just got booted from that club, marking a dramatic fall from grace after years of mismanagement and losses.