www.washingtonpost.com/wp-dyn/content/article/2009/02/0 -
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Published on: 1/1/2009
Last Visited: 2/9/2009
As James Bianco of Bianco Research observed last month, all seven of the companies in this paragraph combined carry less weight in the index than IBM does alone.
In practice, this has reduced the Dow's financial and automotive companies to statistical lightweights.
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When AT&T and Kodak lost their places in the Dow in 2004, the change was widely viewed as a blow to their status. (Adding insult to injury, AT&T was replaced in the index by its progeny, Verizon.) Dropping companies like GM and Citi would be politically unpopular, Bianco believes, but it's necessary to reflect how chaotic the market remains.
"I've heard people on CNBC saying that volatility is subsiding, that the Dow's not having three- or four-hundred-point daily swings anymore," Bianco says.