Dow 10K Redux

When they passed out the commemorative baseball caps today, I couldn’t help but think of the first time, now over 10 years ago. In the lists below, I’ve highlighted the companies that survived in that venerable index that equals “the market” for most people.

DJIA-10yr from

10-year Dow Industrials from

Dow Components

On March 29, 1999 they were

Alcoa Incorporated
AlliedSignal Incorporated
American Express Company
AT&T Corporation
Boeing Company
Caterpillar Incorporated

Citigroup Incorporated
Coca-Cola Company
Du Pont
Eastman Kodak Company
Exxon Corporation
General Electric Company
General Motors Corporation
Hewlett-Packard Company
International Business Machines

International Paper Company
J.P. Morgan & Company
Johnson & Johnson

McDonald’s Corporation
Merck & Company, Inc.
Minnesota Mining & Mfg

Philip Morris Companies Inc.
Procter & Gamble Company
Sears Roebuck & Company
Union Carbide
United Technologies Corporation
Wal-Mart Stores Incorporated
Walt Disney Company

Today (October 13, 2009), they are

3M Company
Alcoa Incorporated
American Express Company

AT&T Incorporated
Bank of America Corporation
Boeing Corporation
Caterpillar Incorporated
Chevron Corporation

Cisco Systems, Inc.
Coca-Cola Company

Exxon Mobil Corporation
General Electric Company
Hewlett-Packard Company

Home Depot Incorporated
Intel Corporation
International Business Machines
Johnson & Johnson
J.P. Morgan Chase & Company

Kraft Foods Inc.
McDonald’s Corporation
Merck & Company, Incorporated

Microsoft Corporation
Pfizer Incorporated
Procter & Gamble Company
The Travelers Companies, Inc.
United Technologies
Verizon Company
Wal-Mart Stores Incorporated
Walt Disney Company

Nineteen companies survived this turbulent decade as members of the premier market average (or twenty, if you take Exxon, though most of us think Exxon was the acquiree). Before you lambaste me with comments that I missed AT&T, remember that it’s a different company, since the old Ma Bell was on its last legs as the 20th century came to an end, the former “Baby Bell”, SBC bought the mobile phone business of the empty shell, and with that purchase they got the right to call themselves AT&T. We know they are really Southwestern Bell.

Also, by looking at the before and after, we miss the excitement of seeing AIG take its place in the average as the world’s largest insurance company, and then collapse beneath the ignominy of a savings and loan bank license used to create the world’s biggest unfunded insurance scam, all out of offices in London and Stamford, unbeknownst to their “regulator,” the Office of Thrift Supervision (OTS).

Not seeing such perennial industrial powerhouses as Union Carbide, GM, Goodyear or International Paper is disconcerting for anyone over the age of 40, not to mention former “nifty fifty” member Kodak, or the retailer that redefined the modern business of retailing, Sears. Even the owner of the index has changed, since Dow Jones & Company is just a small sliver of Australian Rupert Murdoch’s global media machine today.

The question that popped into my head was not whether the world had changed while the “market” didn’t, but where the stocks of those thirty companies of ten and a half years ago would put the Dow Industrials today.

Using the Dow’s peculiar “divisor” technique of adjusting for splits, etc. Since I don’t have all the data to recalculate the divisor the way it has been done since Charles Dow’s earlier averages needed “fudge factors” in 1928, I’ll have to settle for the simple solution of using today’s divisor (0.132319125) on the survivors and then add in the missing stocks.

Even giving Exxon Mobil full credit, and today’s AT&T credit for a quarter of its capitalization due to the mobile phones, we get an adjusted 7946 Dow Industrial points from those 21 stocks.

The other nine don’t help much. Back in ’99 when the Dow first hit 10K, Goodyear was trading right around $50 a share, and contributing about 200 points to the Dow. Today it’s more like $17.50 (132 Dow points). That’s an artifact of the divisor being cut in half over the past ten years, which means each stock price point in a Dow stock today moves the average twice as much as a point in a Dow stock did in 1999.

GM contributes a goose egg. Allied Signal (later Honeywell) is good for 283 points. Citi and Kodak each would contribute 34 Dow points today. International Paper, 184. Since Union Carbide was swallowed by Dow Chemical and that division is now 8% of the employees, I’ll give it one tenth of Dow’s market cap, or 20.46 Dow points. Big MO (Altria), effectively replaced by its temporary subsidiary Kraft, would contribute 138 points. For comparison purposes, Kraft contributes 196. Sears Holdings is another special case, since the Sears name is only on a quarter of the stores after K-mart took it over in a cash-out refi real estate play by Eddie Lampert. I’ll give the old Sears a quarter of the 555 points SHLD would garner, or 139 points.

All in, by my inaccurate rough calculations, the Dow Industrials would be at 9,326 at yesterday’s close instead of 10,015. Seems about right, even if I did get there by a method that any self-respecting quant would reject out of hand.

I’ll try my newby blogger hand at putting in a couple of links now. First is the announcement for the latest Dow Industrial Divisor and the second is a nifty study that shows those guys weren’t totally dumb in their pre-computer invention of the divisor itself. Nice kludge.

More later,



3 Responses to Dow 10K Redux

  1. Burnie says:

    I got to my advanced age without a clue about stocks or anything related to them. Now I find that was a very big mistake. Hopefully I will learn something. My journey has always been a spiritual one and even though I owned(own) an excavation business, a one man show, I did not pay attention to money in the sense of using it as a tool. I just always knew where I stood and how much I owed and that was the way I did business. It was always personal, when I worked for someone they became, for the most part, friends. So, thanks again, I will be following your site courtesy of your friend George Ure, whose site I read everyday.

  2. ted slack says:


    UrbanSurvival a/k/a George Ure’s mention of your new Blog caught my notice. I usually check his site @ ~8am, 6 days a week.

    Having been an reader of Harry Browne, I’ve expected the current mess for a long time. I only really started paying attention again on 9/15/08 at which point I thought OH S**T! it’s finally started. We’ll live in interesting times.

    I started in computers before is was cool, and moved from machine operator to MIS Director over 20 years. I then decided that I would rather be a rocket scientist when our company was acquired by jerks. Now I only know about rockets although I occasionally think in Fortran.

    I’ll certainly check back and see how it goes here, best wishes, etc.

  3. Cy Berlowitz says:

    Howard, just got through checking out the site. This could be an excellent source of well-written information. I look forward to checking in in future weeks and months.

    Good Luck,


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