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Author Topic: GM has just been kicked out of the Dow Jones?  (Read 2402 times)

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Offline Mr Mannn

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GM has just been kicked out of the Dow Jones?
« on: June 01, 2009, 05:43:57 PM »
I can't put this in Breaking News cause I don't have a story yet,
News alert on Fox. The banner across the bottom of the screen says it was replaced in the "Dow 30" by Cisco

Can you guys help me? This sounds really bad, is it? What does this mean?

Mods you can do anything you want with this. change the title, move the thread, anything you want.
I have gotten all excited over nothing before. So if this needs to be deleted, go ahead. I can take it.
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Offline Chris

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Re: GM has just been kicked out of the Dow Jones?
« Reply #1 on: June 01, 2009, 06:17:01 PM »
I heard the same thing.  Here's one article:

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6410339.ece
Quote
Citigroup and General Motors were ejected from the Dow Jones industrial average after both groups' dramatic falls from grace amid the financial crisis.

Travelers, the insurer that was once a division of Citicorp, will take Citigroup's place after the bank was forced to accept billion of dollars in US taxpayer money to stay afloat.

Cisco Systems, the technology group, will replace GM, which is leaving the high-profile index after filing for bankruptcy yesterday. The decision to remove GM ends the carmaker's 83-year run as an index member.

The index is overseen by the editors of The Wall Street Journal, owned by Dow Jones, rather than being decided by a company's market value, as with the FTSE 100, which is to unveil its quarterly reshuffle.
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Offline Mr Mannn

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Re: GM has just been kicked out of the Dow Jones?
« Reply #2 on: June 01, 2009, 06:19:29 PM »
OK, how bad is this?
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Offline Chris_

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Re: GM has just been kicked out of the Dow Jones?
« Reply #3 on: June 01, 2009, 06:30:05 PM »
Quote from: Mr Mannn on June 01, 2009, 06:19:29 PM
OK, how bad is this?

Well, considering that the Dow has been just an indiactor of the economic health of the market generally, I can see this one of two ways.

First; it could be an attempt by the market to mask just how truly deep in the toilet the economy is headed.  Replacing a dead carcass of a failed company, with a firm possessed of a little more life to it could also be just an attempt to mold the model to more accurately reflect the modern day market trends a little more accurately.

Of course if it was my decision to make, Citibank and Gummint Motors woulda been outa there the moment they bent over and grabbed the ankles for Big Brotha.
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Offline Chris

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Re: GM has just been kicked out of the Dow Jones?
« Reply #4 on: June 01, 2009, 06:31:29 PM »
Quote from: Mr Mannn on June 01, 2009, 06:19:29 PM
OK, how bad is this?

It means that GM is crap. 
Quote
It is an index that shows how certain stocks have traded.  Dow compiled the index to gauge the performance of the industrial sector of the American stock market. It is the second-oldest U.S. market index, after the Dow Jones Transportation Average, which Dow also created.  The average is computed from the stock prices of 30 of the largest and most widely held public companies in the United States.

http://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average
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Offline Hawkgirl

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Re: GM has just been kicked out of the Dow Jones?
« Reply #5 on: June 01, 2009, 06:55:03 PM »
I read citicorp was also kicked out...people are saying it's going to increase volatility.
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Offline thundley4

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Re: GM has just been kicked out of the Dow Jones?
« Reply #6 on: June 01, 2009, 07:28:16 PM »
Quote from: Hawkgirl on June 01, 2009, 06:55:03 PM
I read citicorp was also kicked out...people are saying it's going to increase volatility.


Ah, very good, everything is going according to plan.
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Offline jtyangel

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Re: GM has just been kicked out of the Dow Jones?
« Reply #7 on: June 01, 2009, 07:47:50 PM »
Companies are changed out from time to time when they no longer meet requirements of the DJIA...pdf showing the DOW history of companies that were a part of the average since its inception. Every year shows any that are taken out and what they were replaced by.

http://www.djindexes.com/mdsidx/downloads/DJIA_Hist_Comp.pdf


As for what it means, I can't even imagine working in the investment field still. With what's going on, it seems as if some of this is now based on government whim. Should make for lots of stability in the future. :whatever:
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Offline Baruch Menachem

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Re: GM has just been kicked out of the Dow Jones?
« Reply #8 on: June 01, 2009, 08:08:43 PM »
Citibank really doesn't belong on the NYSE anymore anyway, and neitber does GM, as they don't meet several of the requirements.


As for its greater meaning, there really isn't much.  GM is just one more company that vanished due to changing realities of the economy.   

As Chris noted, the Dow changes on a regular basis.

Chrysler has been to the brink before.  GM going there is kind of new.

The real issue is that the Government owns 60% of a major corporation.  I see no way to get rid of this albatross.  Ever.   This will be worse than Amtrack by several orders of magnitude. 
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Offline thundley4

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Re: GM has just been kicked out of the Dow Jones?
« Reply #9 on: June 01, 2009, 08:13:53 PM »
Quote
The real issue is that the Government owns 60% of a major corporation.  I see no way to get rid of this albatross.  Ever.   This will be worse than Amtrack by several orders of magnitude

OMG!! Is it going to be worse than the USPS?  Probably by a long shot.
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