I saw a headline stating that Exxon Mobil is being dropped from the Dow Jones Industrial Average, and I clicked the link because I was curious to know why. I learned that Exxon Mobil has been a part of the Dow since 1928, making it the oldest member. So what happened?
As I read the article, I realized that I had misunderstood what this means. I was confusing it with being delisted from a stock exchange, which usually means that your company is circling the drain and its stock is almost worthless. (This happened to one of my former employers, Pliant Systems, in 1999.) But the Dow is a stock index, not an exchange. Basically, it’s a bundle of stocks that are selected to represent the American economy as a whole. As such, it needs to be updated as the economy evolves.
This particular update was triggered by an impending Apple stock split, which would alter the blend of manufacturing and technology stocks in the index. So the Dow is adding some tech stocks: Salesforce, Amgen and Honeywell. Also being dropped are the drug company Pfizer . . . and my current employer, Raytheon Technologies.
That was a bit of a shock. I’ll try not to take it personally.