With shares of Apple (AAPL) trading at all-time highs and approaching the $500 mark, we have had a few people ask us recently where the Dow Jones Industrial Average (DJIA) would be trading if the stock were in the DJIA. While there are numerous stocks that fit the criteria for inclusion but aren't in the index, AAPL is a somewhat unique scenario. The reason is that back in June 2009 there were many who expected the stock to be added to the index when General Motors (GM) was removed.
Although AAPL's share price is prohibitively high to be included in the index now (it would account for more than 20% of the index), back in June 2009 the stock was trading at a much more reasonable level of $143. What would have made AAPL an even more appealing choice is the fact that its products are so ubiquitous in the American culture. Just as there used to be a General Motors car in nearly every American driveway, practically every household today has at least one AAPL product in their home. In the end, the keepers of the DJIA ultimately chose Cisco (CSCO) instead of AAPL, and the rest is history.
Even though AAPL was not chosen to replace GM, it is always fun to see what might have been. To that end, we have recalculated the performance of the DJIA to reflect how it would have done if AAPL was added to the DJIA instead of CSCO. The chart below shows the current DJIA (blue line) compared to the 'Apple' DJIA (red line). Currently, the DJIA is trading at a level of roughly 12,865, which is about 12.1% off its all-time high of 14,198.10 from October 2007. If AAPL was in the DJIA, though, the index would not only be significantly higher (14%), but it would also be trading at an all-time high of 14,636. Granted, you cannot go back and change the past, but we wonder if investor sentiment would be more positive if the DJIA was trading at record highs?
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