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Comment by clacomdty | Hacker News Reader

Index portfolio manager here.

The one thing the article fails to mention is that the addition of Apple will coincide with a 4:1 stock split in Visa[0]- the index's highest priced (and thus highest-weighted) holding.

Although the addition of Apple had been anticipated, Visa's split was definitely a catalyst. Had they not added Apple, the technology sector within the index would have dropped significantly, in line with Visa's split. The addition of Apple will minimize the impact.

0.http://neworleanscitybusiness.com/blog/2015/03/06/visa-stock...

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That sounds utterly ridiculous. Why would they base anything off the price of the stocks? If they all issue a 2:1 split, then what, the index drops by half?

Why would anyone use such a measurement? Why would anyone continue to cite such a measurement? It makes me wonder what other widely-used things are shams but I lack the knowledge to judge.

Or am I getting this totally wrong?

It's not terribly rare that a stock splits in the Dow.

The index value itself doesn't change on account of the split (that would be ridiculous). Visa's weight will drop, and every other stock in the index will increase accordingly. They use an index divisor to maintain the current level of the index when corporate actions like this occur: http://www.investopedia.com/terms/i/indexdivisor.asp

At this point, the Dow is only cited because "it's been around forever." That, and Dow Jones is owned by News Corp. So of course the media wants to keep promoting its own subsidiary.

Actually, both the DJIA and the S&P 500 (the index that's actually worth a damn) are produced by the same entity these days: http://en.wikipedia.org/wiki/S&P_Dow_Jones_Indices

I wonder who actually does care about the Dow? Are there actually a lot of investors that don't know any better? Or is it just people who think the stock market is important (itself questionable) but don't know anything about it?

> Or is it just people who think the stock market is important (itself questionable) but don't know anything about it?

As a kid, for many years, the first and only exposure I had to the concept of the stock market was the clockwork reference to DJIA on public radio or tv. I think the founding of the exchange might have been mentioned in school, too (and not much else).

So, later in life, when I wanted to understand things better, I started reading about the Dow and picking it apart. It was an entry point for me; I assume it must have been for many others as well.

Now that I have more knowledge, I question - as you apparently do - whether any of it is worth getting too deeply involved in for the average person. Still, I'm glad I know more about it now, and I do think we need far better financial literacy built into our school system.

So AT&T is not considered a technology stock? What is it?

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