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| Companies can be replaced in the Dow, how is this any different from any very large company changing it's business with time. Money losing divisions are liquidated, new enterprises developed and added.
Take a company like Johnson & Johnson (I don't know if they are in the Dow, or ever have been) has multiple enterprises and products which come & go.
What's important is whether a particular index fairly represents the economic sector that it's designed to and the changes in the stock values represent the earnings potential of that sector.
Remember, the value of stocks isn't necessarily in the physical assets of a company. Take a company like Apple. I'd guess that the physical assets of Apple are quite modest compared to the engineering & design value of it's workforce, patents and trade secrets. It's about the price/earnings ratio. | |
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So chartist what do you make of this and where is it heading?
