GE:  Impact of being dropped from the DOW

It’s been a bad 12 months for General Electric.  The latest negative news to hit the stock is that GE might be dropped from the DOW.  How detrimental would this be?  Maybe less than you’d think.

September 20, 2013 was the last time there was a major shakeup in the DOW.  Bank of America (BAC), Alcoa (AA) and Hewlett Packard (HPQ) were all dropped from the index.

Since being eliminated from the DOW, they’ve all significantly outperformed the S&P500 (see chart).

Performance-

  • BAC:       132%
  • AA:         173%
  • HPQ:      178%
  • S&P500: 65%

Being dropped from the DOW might be more of a blessing than a curse.  If anything, I view it as a positive contrarian indicator.  I remain long in my GE position.

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