Letting new companies into the Dow Jones Industrials
Over the weekend, Barron's ran a cover story in which it called for the Dow's handlers to get Apple
What the Dow needs
The Motley Fool has run several articles about the problems of the Dow. The biggest barrier to entry for both Apple and Google is the Dow's insistence on using price-based weighting, which has the benefit of being simple but makes it practically impossible to admit companies whose shares trade at very high levels. Apple has been reluctant to split its $600 shares, and Google's recently announced 2-for-1 split would still leave shares trading at around $300.
Still, an invitation to the Dow might be enticement enough for them to consider the move. But the other difficulty comes from making space for new entrants without skewing the index. With a market cap of only $10 billion, Alcoa
Perhaps the answer is to expand the Dow beyond 30 stocks. The last time the Dow expanded was in 1928, but the move isn't unprecedented. Moreover, as the Dow has gone beyond true industrial stocks to encompass nearly the entire market, boosting representation makes a great deal of sense -- and could make it a lot easier for big players like Apple and Google to gain a voice.
Don't hold your breath
Of course, the history and traditions of the Dow make changes hard. The same thing holds for stocks that you've followed forever. But with earnings season still continuing, you should expand your horizons and look at the Fool's latest special report, in which we reveal five stocks you truly can't afford to ignore. Please accept my invitation to read this free report today by clicking here -- but do it now, before earnings season ends.
Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. You can follow him on Twitter here. The Motley Fool owns shares of Google and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Google, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.