Visa Leads the Dow Jones Lower Today

Visa (NYSE: V  ) is leading the Dow Jones Industrial Average (DJINDICES: ^DJI  )  down after the company announced the retirement of one of its key executives. As of 1:20 p.m. EDT the Dow was down 30 points to 16,716. The S&P 500 (SNPINDEX: ^GSPC  ) was down two points to 1,923.

Visa is down 1.1%, pulling the Dow Jones Industrial Average down with it, after the company announced this morning that its chief financial officer, Byron Pollitt, Jr., plans to retire within the next 12 months. Pollitt was been CFO since 2007 and was part of the management team that took Visa public. It's unsurprising that Visa is down, as the market only ever likes management change if the current team is despised. The only thing worse than change is sudden change, so it's a positive that Visa made this announcement now, rather than at the last minute. In Bryan Pollitt, Visa is losing some significant experience: Pollitt was previously the CFO of Gap and before that CFO of Walt Disney Parks and Resorts.

Visa and the Dow Jones Industrial Average
Under Pollitt, Visa has risen from its IPO price of $44 to its current price of $211.24. Because the Dow Jones is a price-weighted index, Visa is now the largest component of the Dow Jones Industrial Average despite being nowhere near the largest company on the Dow by market capitalization.


Although the Dow Jones is far more popular than the S&P 500 among the general public, the price weighting of the Dow Jones is one of the reasons I am not a fan of the index and suggest that people familiarize themselves with the S&P 500 instead. Another reason: The Dow Jones committee has made some questionable and poorly timed removals and additions. If the early Dow Jones committee had been less active in switching components and instead acted like long-term investors, holding their picks for the long run, the Dow Jones Industrial Average would now be above 39,000!

Bottom line
Visa has built up an unbeatable moat
in its market that enables the company to post huge profits every year. Investors who focused on this moat, ignored the ups and downs of Visa's stock price, and held for the long run have profited handsomely.

Investors can learn something from the story of Visa and the Dow Jones Industrial Average. The best investors invest in great companies at good prices, continue to educate ourselves, and hold on to great companies over the long term. The market will fluctuate, sometimes massively, but great companies will win out over the long run.

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 per hour (That's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click HERE to discover more about this industry-leading stock and join Buffett in his quest for a veritable landslide of profits!

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2981023, ~/Articles/ArticleHandler.aspx, 8/31/2015 10:15:41 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Dzombak

Dan Dzombak has written for The Motley Fool since 2008. He covers value investing, investing process, and success among other things. You can follow him on Facebook or Twitter by clicking the buttons below or head over to his blog at

Today's Market

updated 59 minutes ago Sponsored by:
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASD 4,776.51 -51.82 -1.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/31/2015 4:01 PM
V $71.30 Down -1.16 -1.60%
Visa CAPS Rating: ****
^DJI $16528.03 Down -114.98 -0.69%
^GSPC $1972.18 Down -16.69 -0.84%
S&P 500 INDEX CAPS Rating: No stars