Thursday, February 2, 2012

Dow Jones Industrial Average - Component Weights

The Dow Jones Industrial Average (DJIA) is an index composed of the 30 largest, publicly-traded American companies (with one major exception - Apple).

Unlike other indices, the Dow30 is weighted towards the trading price of the underlying stocks.  Therefore, a $100 stock holds more weight than a $10 stock.  Accordingly, the Dow30 would increase more (points-wise or percentage-wise) when the $100 stock increases 10% than when the $10 stock appreciates 10% holding the other 28 stock movements constant.

The table below lists all 30 Dow components along with their 2/2/2012 closing price and associated component-weights (in percent of index).

STOCK PRICE ($) % of Dow30
IBM 191.53 11.41%
CAT 110.33 6.57%
CVX 103.69 6.18%
MCD 98.62 5.87%
MMM 87.43 5.21%
XOM 83.53 4.98%
UTX 80.02 4.77%
BA 75.22 4.48%
KO 67.83 4.04%
JNJ 65.59 3.91%
PG 63.32 3.77%
WMT 61.94 3.69%
TRV 59.39 3.54%
DD 51.4 3.06%
AXP 51.16 3.05%
HD 44.46 2.65%
DIS 38.91 2.32%
MRK 38.44 2.29%
KFT 38.58 2.30%
VZ 37.56 2.24%
JPM 37.55 2.24%
MSFT 29.95 1.78%
T 29.79 1.77%
HPQ 28.5 1.70%
INTC 26.49 1.58%
PFE 21.11 1.26%
CSCO 19.8 1.18%
GE 18.75 1.12%
AA 10.42 0.62%
BAC 7.45 0.44%
Total 1678.76
DJIA 12705.41
Multiplier 7.568
(as of 2/2/2012 close 3PM ET)

As you can tell, IBM carries as much weight as the bottom 9 components COMBINED.  Another observation is that the top 10 components hold over 57% of the index weight.  OccupyDow10.

Oh by the way, if Apple replaced IBM in the index (for some odd reason), AAPL would have a 23.43% weight.  That is madness.

Tuesday, December 27, 2011

12 Non-Obvious Predictions for 2012

Here are my non-obvious macro predictions for 2012 given without any reasons..

1. Former Colonies Bail Out Countries :  Brazil will bail out Portugal.

2. The World's Population Decreases : This will end certain Ponzi-like Schemes.

3. North & South Korea Starts to Unify : OccupyPyongyang.

4. Iran Attacked, and not by Israel : Hackers protect the Hormuz.

5. Poland and Turkey Act as Europe's Growth Engine : Take PIIGS Out of Headlines

6. BRICs will become BIT : Brazil, Indonesia, Turkey as other Emerging Markets Regress

7. US and European Elections Followed Up With Mass Protests : End of Entitlements to cause Civil Wars.

8. Cuba's Economy Doubles : With or Without a Castro at the helm.

9. Something From Space Will Change the World : Not talking about aliens or asteroids, but rather new resource discovery or satellite issues.

10. Entrepreneurial Creative Destruction and Micro-finance on Hold : The next "Big Thing" will much harder for the small guy or gal.

11. Asian & South American Currency Crisis Part II : Dollar's strength (sans QE3) creates unintended collateral damage.

12. Stockgut's Predictions are Guaranteed to be Wrong : Then again maybe #12 is wrong.  Hope you've been entertained from a so-called non-expert.