Dow Industrials Delists GM Along With Citigroup
Dow Jones and Company reported Monday that it would be adding two new businesses to its industrial average. The two corporations are Travelers and Cisco Systems. However, when two go in the average, two have to leave.
Given the reports that has happened with GM over the earlier few months, it is a no brainier that GM would be removed from the average. Though, Citigroup was also let go.
Travelers was once a subsidiary of Citigroup and will help maintain the representation of financial companies in the average.
Citigroup has had a pretty rough year with subprime lending, the credit crisis, and eventually the downturn taking huge cuts from Citigroup. Citigroup is the 2nd financial business to be dropped from the average during this downturn, the first was AIG. AIG was taken off the average in September after the government took an 80% investment in the company and lent it several billion dollars in bailout money.
The Dow industrial average is made up of 30 stocks. These stocks are a measure of the marketplace and what the public frequently looks at to assess the health of the markets as well as the economy. It is right now made up of (on top of Travelers and Cisco) 3M (MMM), Alcoa (AA), American Express (AXP), At&t (T), Bank of America (BAC), Boeing (BA), Caterpillar (CAT), Chevron Corporation (CVX), Coca-Cola (KO), DuPont (DD), ExxonMobil (XOM), General Electric (GE), Hewlett-Packard (HPO), The Home Depot (HD), Intel (INTC), IBM (IBM), Johnson & Johnson (JNJ), JPMorgan Chase (JPM), Kraft foods (KFT), McDonalds (MCD), Merk (MRK), Microsoft (MSFT), Pfizer (PFE), Procter & Gamble (PG), United Technologies Corporation (UTX), Verizon Communications (VZ), Wal-Mart (WMT), and Walt Disney (DIS).
The changes will go into effect next Monday.
Citi has been sitting in the Dow industrial average for 12 years, at the time it was listed as Citicorp. It became Citigroup in 1998 when Travelers Group merged with Citicorp. In 2002, Travelers was spun off yet again and has been a unattached company ever since. So, it is a bit odd that the parent business has fallen off the average and has been out performed by its subsidiary.
In truth, Travelers is accepting AIG’s formerly held location in the average. The core product of both corporations is the same; casualty insurance sales.
GM has to get its actions organized to even be considered before it is put back on the average yet again. It will probably be years for the once strong auto business to see the tops of any list. However, I do believe that insolvency was a movement in the correct direction. If it were left up to its own devices, GM would have been filing for bankruptcy a year ago, if the government wouldn’t have stepped in. Worse, if they didn’t file for insolvency and couldn’t reform, the government would have lost all of our capital in the GM “venture” and would be heaving money into a limitless abyss.
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