Thursday, June 2, 2016

The DJII - America Yesterday and Today:

The changing components of the Dow Jones Industrial Average (DJII) reflect the gradual transition of America yesterday to America today. Years ago – back in the 1980’s investors enjoyed the returns of the Dow Jones Industrial Average which ran from about 800 to over 3000 in ten years – a triple.

Back then the Dow was truly “industrial” with eighteen industrial relater components. There were only six consumer related components with the rest being energy, financial and IBM or “big blue”. Those were the days when the Dow components employed people who made stuff - Allied Chemical, Aluminum Company of America, American Can, Bethlehem Steel, Du Pont, Eastman Kodak Company, General Electric Company, General Motors Corporation and Goodyear – just to name a few of the employers.

Today the Dow is no longer “industrial: with only six industrial manes and twelve consumer names. So instead of working at Goodyear and Union Carbide the jobs go to McDonald's Corp and Wal-Mart Stores Inc.

Yes today’s Dow is populated by companies that sell stuff to Americans that was made somewhere else. We can go to Dow components Wal-Mart, grab a Coke and burger at McDonalds, pick up a Disney movie, get a cell phone plan from Verizon Communications Inc. and use our Visa Inc. credit card. We could also run our American Express Company card at The Home Depot, Inc to cover the purchase of Asian flooring. And yes you could look for shoes from Nike, Inc while you’re out there.


Shawn Severin said...

Do you think we're looking at another triple decade ahead for the DOW?


Shawn Severin said...

Yep, you were right about healthcare. From leader to laggard. VHT, IBB, etc.

Shawn Severin said...

What's your view on the recent move in gold and mining stocks? A new bull market or a bear trap? Why do you think this is happening? Inflation? said...

Hi Shawn

I think the broader stock indices work higher

Also the current advance in the gold complex is likely not bull trap

The low interest rates drive hard assets higher

Bill C