GM To Bow Out Of The Dow?

gm to bow out of the dow

CNN Money Editor-at-Large Paul R Monica reckons GM is so Dow, I mean down, on its luck that it should be delisted from the Dow Jones Industrial Average. By Monica’s math, GM has a market cap of less than $2 billion, and its stock price has been treading water near $3. “Normally, when a blue-chip company sinks to such depths of despair,” writes Monica, “it gets tossed from the S&P 500. But not only is GM still a member of that index, it remains a component of the granddaddy of market barometers: the venerable Dow Jones Industrial average.” He reveals that Dow executive director John Prestbo is keeping a close eye on the General and any sign of a bankruptcy in the offing. “A company operating under bankruptcy protection is not on a level playing field,” says Prestbo. “What we try to do is make sure every company in the Dow is operating under the same kind of marketplace.”

And though he acknowledges that the Dow doesn’t and shouldn’t take major changes to its listing lightly, Monica argues convincingly that the time has already come to “stop the madness.” The criteria for listing on the DJIA are as follows: “There are no pre-determined criteria except that components should be established U.S. companies that are leaders in their industries. For the sake of continuity, composition changes are rare, and generally occur only after corporate acquisitions or other dramatic shifts in a component’s core business.” Clearly this has taken place, but the real issue seems to be that there are no American automakers ready to take GM’s place on the index. Though Monica recommends listing Toyota in GM’s place, the Dow won’t consider listing a foreign company. “We would justify no autos on the basis that the market currently does not offer a viable U.S. auto investment option,” says Prestbo. “The Dow’s main job is to reflect the U.S. markets and the U.S. economy.”

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  • Charly Charly on Nov 23, 2008

    AFAIK index funds follow the S&P and not the DOW. Buying 10% of Toyota wouldn't lead in itself to a higher Yen. The market cap of Toyota is to small for that.

  • Dougyork Dougyork on Nov 26, 2008

    I think placing Toyota in the Dow isn't as radical as it sounds. The companies American Depository Receipts (ADRs) trade on the NYSE, and of course the company has scads of employees here, designs and sells certain models exclusively in the U.S., etc. I thought having Microsoft join the Dow was somewhat radical in that Microsoft is not a NYSE listed stock as it has elected to remain at home on the tech-laden NASDAQ. At least TM is on the NYSE.

  • FreedMike Back in the '70s, the one thing keeping consumers from buying more Datsuns was styling - these guys were bringing over some of the ugliest product imaginable. Remember the F10? As hard as I try to blot that rolling aberration from my memory, it comes back. So the name change to Nissan made sense, and happened right as they started bringing over good-looking product (like the Maxima that will be featured in this series). They made a pretty clean break.
  • Flowerplough Liability - Autonomous vehicles must be programmed to make life-ending decisions, and who wants to risk that? Hit the moose or dive into the steep grassy ditch? Ram the sudden pile up that is occurring mere feet in front of the bumper or scan the oncoming lane and swing left? Ram the rogue machine that suddenly swung into my lane, head on, or hop up onto the sidewalk and maybe bump a pedestrian? With no driver involved, Ford/Volkswagen or GM or whomever will bear full responsibility and, in America, be ambulance-chaser sued into bankruptcy and extinction in well under a decade. Or maybe the yuge corporations will get special, good-faith, immunity laws, nation-wide? Yeah, that's the ticket.
  • FreedMike It's not that consumers wouldn't want this tech in theory - I think they would. Honestly, the idea of a car that can take over the truly tedious driving stuff that drives me bonkers - like sitting in traffic - appeals to me. But there's no way I'd put my property and my life in the hands of tech that's clearly not ready for prime time, and neither would the majority of other drivers. If they want this tech to sell, they need to get it right.
  • TitaniumZ Of course they are starting to "sour" on the idea. That's what happens when cars start to drive better than people. Humanpilots mostly suck and make bad decisions.
  • Inside Looking Out Why not buy Bronco and call it Defender? Who will notice?