Did you ever wonder why Berkshire Hathaway
I can hear some of you giggling out there, because you know the answer: the Dow is a deeply flawed index that could stand a major makeover.
OK, let me show you what I mean. Now that General Motors
That's also why Google
That's far from the most obnoxious addition to the index imaginable, though. Agriculture and transportation phenom Seaboard carries a market worth of just $1.3 billion -- but this small-cap goes for $1,035 per share. The other 29 share prices add up to $1,048 as I write this. Now, that's what I call overweighted!
In an ideal world, the Dow would be weighted by more reasonable metrics like market cap or revenue. In the second-best of all possible worlds, Google and Berkshire would stop being stubborn and split their shares once in a blue moon. But this is the third-best universe imaginable, at best. We're stuck with what we've got here.
If GM and a couple of other weaklings get booted off the Dow, I'm rooting for Cisco Systems
The larger lesson today is simple: don't stare yourself blind at the Dow Industrials. It doesn't tell the whole story.