By all appearances, the Dow Jones Industrial Average
The Dow goes global
When the index was first created by Charles Dow and Edward Jones in 1896, there was no doubt about its country of origin. All but three of the original 12 stocks had distinctly American names. There was the American Tobacco Company, the Chicago Gas Company, the North American Company, and the United States Rubber Company, to name a few.
Now, only two of its expanded 30 companies are immediately recognizable as such -- that is, Bank of America
Even more telling is the proportion of revenue that the typical Dow company gets from sales here at home. According to quarterly reports and annual filings, the average Dow component derives less than half of its revenue from North America. The majority, or 52%, comes from sales in places like Europe, China, and Brazil.
While the majority of companies fall somewhere in the middle -- 13 get between 40% and 50% of their revenue from North America -- the list isn't without outliers. On one end of the spectrum are Travelers and Home Depot
Source: Respective companies' annual and quarterly reports. Data for AT&T and Verizon not included.
No company on the Dow demonstrates the global nature of the index better than McDonald's
You gotta get your mind right!
It should go without saying that there's nothing inherently wrong with the globalization of the Dow. It's a sign of the times. The world is becoming smaller, commerce more interdependent, and global asset prices -- be it stocks, bonds, or commodities -- increasingly correlated.
At the same time, however, as a professor of mine from law school liked to remind us: "You gotta get your mind right." In other words, simply recognizing that the Dow is transforming into a global index as much as an American one is an important recognition in and of itself, as the index no longer serves as a pure play on the U.S. economy.
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Fool contributor John Maxfield owns shares in Bank of America. The Motley Fool owns shares of Walt Disney, Bank of America, Microsoft, Coca-Cola, Costco, and Intel. Motley Fool newsletter services have recommended buying shares of Intel, Home Depot, Microsoft, Coca-Cola, Costco, Walt Disney, and McDonald's, creating a bull call spread position in Microsoft, and creating a write covered strangle position in American Express. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.