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| By Jim Nelson |
The next time the market opens for business, there will be a major change to one of the big three indices.
Alphabet (GOOGL) will replace Verizon (VZ) in the Dow Jones Industrial Average.
This means five of the Mag 7 are now in the Dow.
When all eyes were on the Nasdaq-100 for including SpaceX early … and the S&P 500 for pointedly refusing early access to the $2 trillion space company … the Dow quietly became yet another tech index.
Of course, it’s been trending in that direction for some time.
Apple (AAPL) was added in 2015. Salesforce (CRM) was added in 2020. And in 2024, Nvidia (NVDA) replaced Intel (INTC).
So, the “Industrials” has looked tech-heavy for a while. But this takes it to a new level.
Why does this matter? Because inclusion in the Dow isn’t necessarily a good thing.
Just take a look at the last two mentioned. Since Nvidia replaced Intel, the former is up 31%. But Intel is up 390%.
For an even more stark difference, look what happened when Salesforce replaced ExxonMobil (XOM):
Salesforce, a software (and now AI) company, is down 42% since its inclusion. Meanwhile, Exxon is up 241%.
The Dow is often known to be backwards-looking.
It took years before railroads didn’t greatly control the index, even after automobiles were in every driveway.
JPMorgan (JPM) wasn’t added until 1991 — 84 years after the company’s namesake became “The Hero of Wall Street” bailing out banks and the government.
It only started adding internet stocks after the Dot-Com Bubble had pushed valuations sky-high.
Now, it’s adding the parent of Google after it climbed 178% over the past five years.
Maybe this is a red flag rather than the Dow getting with the times.
It’s like when a parent starts talking like their children. It’s probably not cool anymore.
Is this like the Dot-Com Era, where the Dow couldn’t have timed it worse?
Or is this like including Apple in 2015, when the iPhone giant still had more than 700% of gains left in it?
Your safe money expert Nilus Mattive has a strong opinion … and recommendations to not end up like the Dow.
Speaking of Nilus, as is our custom, that’s where we start your weekly roundup:
How to Handle the Berkshire Handoff
The Dow isn’t the only dinosaur trying new things. Nilus gives you his take on where the new man in charge of Berkshire Hathaway has gone wrong.
‘Charlie Wilson’s War’ Replaying Over Iran
Bob Czeschin discusses how the weapons of yesterday are still a pain for modern armies. And what that means for Iran.
Apple’s AI Moat Wins the On-Device Revolution
Michael A. Robinson says Apple just handed investors millions of reasons why its post-Dow-inclusion performance isn’t done yet.
Target Profits at the Bottom of the Barrel
Sean Brodrick shows just how low we are on oil in the U.S. It hasn’t been this bad since 1983. He knows just how to play it.
This Specialty Fund Will Soar on U.S. LNG Exports
LNG, on the other hand, is something the U.S. is getting right. Sean has the best way to play that, too.
Why AI Data Centers Are Ditching the Grid
Michael isn’t looking at Alphabet or the other Mag 7 stocks to play the next leg of the AI boom. In fact, he highlights several that you might think would be in an index like the Dow.
The Company Behind Lightspeed AI Data
There’s one other old company that’s becoming crucial to AI. Michael shows you why the maker of Gorilla Glass is the new must-have stock.
Have a great weekend!
Jim Nelson
Managing Editor, Weiss Ratings Daily
