The
Dow is bouncing and the value of the stock in these 30 US companies is
fluctuating. But it’s a mistake to think that the Dow Jones Average is an
accurate reflection of the US economy. This is a “representative” group of
companies. Some have been around a long time and I think they represent a
“club” of companies who are politically connected to those who keep them on the
list, because they have friends who landed on the Mayflower.
The
companies that make up the Dow are not the top 30 US companies ranked by
revenue. The revenue of these companies spans Visa at $14 billion to Walmart at
$486 billion. Half of these companies have revenues under $60 billion. There are 186 companies with higher revenues
than Visa. We have to wonder why some small companies are included in the Dow
30. I guess they are “representative”. Hmmmm.
In
2015, oil stocks were down because of low oil prices and they stopped drilling.
But now oil stocks are back up. In 2015 technology and health insurance stocks
were up in 2015. But now some of those
stocks are down. It’s like taking a ride on the ocean. The companies on the Dow 30 include banks,
pharmaceuticals, oil, electronics, retail, health insurance and conglomerates.
It
makes more sense to watch stocks grouped by industry or watch the S&P 500
Index, but we have off-shored most of our industries. We are in a service
economy working at service jobs. We started all of this in the 1990s when we
entered the “Information Age” and the information wasn’t good.
About
Dow 30 Companies
What is the difference between the S&P 500 and the Fortune 500?
https://www.investopedia.com/ask/answers/033115/what-difference-between-sp-500-and-fortune-500.asp
Dow Jones Industrials Average
(DJIA) or the Dow 30 is
a stock market index that shows how 30 large publicly owned companies in the
United States (US) are trading in the stock market. The Dow 30 consists of companies
across sectors. The components of the index has changed several times, since
its creation in 1896. As of April 24, 2016, the Dow 30 consisted of the
following companies: 3M, American Express, Apple, Boeing, Caterpillar,
Chevron, Cisco Systems, Coca-Cola, E.I. DuPont de Nemours, ExxonMobil, General
Electric (GE), Goldman Sachs, Home Depot, Intel, IBM, JPMorgan Chase, Johnson
& Johnson (J&J), McDonald's, Merck, Microsoft, NIKE, Pfizer, Procter
& Gamble (P&G), Travelers, United Technologies, UnitedHealth Group,
Verizon Communications, Visa, Walmart, Walt Disney.
The
chart below presents the 2015 revenues of the individual Dow 30 companies.
Walmart leads the pack with $482 billion in revenues. The smallest company in
Dow 30 companies in terms of revenues is Visa. Its 2015 revenues were $14
billion.
In
April 2017 the Dow 30 index was at 20578.71 and climbed to 26078.89 by January
30, 2018. It settled back by April 2018,
to 23848.42. The point gain in the Dow
30 from April 2017 to April 2018 was 3269.71. That’s a 15.9% gain.
The
S&P 500 Index
In
April 2017 the S&P 500 index was 2357.49. In January 2018 it had climbed to
2872.87. In April 2018 it adjusted back
to 2644.66. The point gain in the S&P 500 index from April 2017 to April
2018 was 287.17. That’s a 12.2% gain.
The
full list of the fortune 500 companies in rank order by revenue is at: http://fortune.com/fortune500/list/
The Fortune 500 and the S&P 500 are different measures of
companies in the United States, and they are compiled by two different
companies. The Fortune 500 is an annual list of the 500 largest companies using
the most recent revenue figures and includes public and private companies.
The S&P 500 is an index of 500 public companies that are selected by
the S&P Index Committee. The main difference between the two lists is that
one includes private companies, while the other only includes publicly traded
large-cap companies.
The Fortune 500 is an annual list of
the 500 largest companies in the U.S. using the most recent figures for
revenues. It is compiled and managed by Fortune magazine and includes both
public and private companies. The Fortune 500 can be used to gauge the health of the overall U.S. economy. When many
companies of a sector are removed from the list, it may signal weakness in that
particular sector.
The S&P 500 is an index composed of 500 large-cap
stocks that represent the leading industries of the U.S. economy. The S&P
Index Committee chooses which 500 companies should be placed in the index by
analyzing liquidity, industry and market capitalization of publicly traded
companies.
Large-cap companies are those that have a market capitalization of
over $10 billion. The S&P 500 measures the overall risk, return and
performance of the large-cap equities market. It is the main benchmark that investors and
practitioners use to gauge the health of U.S. large-cap stocks.
Norb
Leahy, Dunwoody GA Tea Party Leader
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