Kraft Foods to Replace AIG in Dow
Wow, that didn’t take long . . . effective September 22 (Monday).
AIG, which joined the Dow in 2004, is the latest in a series of disastrous Dow picks: Microsoft, Intel, and Home Depot . . .
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Here is the statement from the Dow committee, via the WSJ:
Kraft Foods Inc. will replace American International Group Inc.
in the Dow Jones Industrial Average effective Monday, a further sign of the woes
afflicting the insurance giant.The change comes as the federal government late Tuesday agreed to take over
the troubled insurance giant in an $85 billion bailout.The composition of the Dow industrials was last changed in February, when Bank of America Corp. and Chevron Corp. replaced former
Kraft parent Altria Group Inc. and Honeywell International Inc.Robert Thomson, managing editor of The Wall Street Journal and overseer of
the Dow’s makeup, said not adding a financial company to replace AIG is prudent
at this time "because of the extremely unsettled conditions." He added Kraft was
added because the index has no food companies.Dow Jones Indexes editor John Prestbo said pulling AIG from the index stemmed
from AIG’s "effective nationalization … and its very low stock price."Shares have tumbled 90% this month as investors got increasingly concerned
about AIG’s ability to raise capital. That crisis of confidence, coupled with
credit-rating downgrades earlier this week, effectively forced the government to
step in after private entities refused to help in the firm’s rescue without risk
guarantees.AIG joined the Dow industrials on April 1, 2004.
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Source:
Kraft to Replace AIG in Dow
KEVIN KINGSBURY
WSJ, SEPTEMBER 18, 2008, 9:34 A.M. ET
http://online.wsj.com/article/SB122174423720252297.html
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September 18th, 2008 at 9:51 am
OK, I will be the first to say it: That’s cheesy.
The way America is going, Campbell’s Soup will replace Bank of America.
September 18th, 2008 at 9:57 am
did anyone see that video of Dylan Ratigan ripping Jay Drhu a new one? Please post it if you can find it!
Thanks
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BR: Fuinny you asked, I was just discussing it with Jeff Macke — its the 11:45am post
September 18th, 2008 at 10:02 am
at least it’s even swap, one company filled with toxic ingredients out…
September 18th, 2008 at 10:26 am
This seems more normal somehow, to have a company that makes products. The contribution of the financials to the S and P 500 is declining further with each cycle of the bear market.
Barry, are we going to have the mother of all short squeezes today? Kinda feels to me like that is on the way.
September 18th, 2008 at 10:37 am
The MSFT pick was particularly dumb. When it was added, MSFT had already “jumped the shark”.
And I’ve been pretty underwhelmed with HD’s management.
September 18th, 2008 at 10:50 am
isn’t the purpose of the dow is to be representative of the US market? having companies that screw up as well as out perform seems to me as representative of the market–or are companies share prices required to always go up?
September 18th, 2008 at 11:05 am
I don’t see how MSFT and Intel were bad picks – both make tons of money making real products that 95% of the world’s population uses.
Sometimes Barry gets idiotically hysteric, like calling the whole country (Russia) a “criminal enterprise” (really, the whole country with the world’s 7th GDP and all of its economy?), or like calling the two workhorses of the US economy “bad Dow picks”.
September 18th, 2008 at 11:14 am
Ranch or Blue cheese?
September 18th, 2008 at 11:15 am
>isn’t the purpose of the dow is to be representative of the US market?
No.
>or are companies share prices required to always go up?
Now you’re getting the hang of it! Cracks me up when people wave graphs of the DJIA at me and solemly state “over the long term, the Dow always goes up.” No shit, dude. Ever hear of International Harvester?
September 18th, 2008 at 11:19 am
OK, I will be the first to say it: That’s cheesy.
The way America is going, Campbell’s Soup will replace Bank of America.
Posted by: CNBC Sucks | Sep 18, 2008 9:51:34 AM”"”"”"”"”"”"”"”"”"”"”"”
and that is a good thing, the index needs less financials and more real companies
with dependable earnings.
I love it !!.
The financials are still revered by guys like you, but it will change.
The fianncials are like a service business,
like the ATM machines.
September 18th, 2008 at 11:47 am
Defensive stock? Sounds like more than a few people think the US might be headed down a falling path. A year ago it would have been laughable to have Kraft in the index! But today… by George we need some stability! Beta 0.85!
September 18th, 2008 at 12:05 pm
CNBC people seem to me to be whiners so frequently when they don’t have a grasp of the problems about which they carp.
September 18th, 2008 at 12:36 pm
Amen TOM – KEEP AIG in the Dow a perfect example of our dorked economy, a company in receivership and our biggest US export – financial instability
September 18th, 2008 at 12:36 pm
Rickrude, the problem is financials forgot they were service companies and turned into greed machines. And we all get to eat mac and cheese now to pay for it…
September 18th, 2008 at 12:47 pm
And we all get to eat mac and cheese now to pay for it…
True,
but now, do you get to eat KRAFT mac & cheese
or do you get to eat the cheaper store brand?
Are some mac & cheeses are more equal
than other mac & cheeses?
September 18th, 2008 at 1:27 pm
Au contraire, my friend, I do not revere financials (except for GS which just has some of the hottest women I have ever seen). I just want my American Dow Jones INDUSTRIAL companies to be, well, industrial, not the purveyors of cheese, soup, and McNuggets.
Pretty soon, Kraft and Campbell’s Soup will merge, combine their unique strengths, and America will be seen as innovative again, inventing unheard-of wonders for the world such as broccoli cheese soup, French onion soup, cauliflower cheese soup, potato cheese soup…
September 18th, 2008 at 2:33 pm
Ahh, so now we know how they plan to keep the Dow above 10,000… or was it 9,000?
September 18th, 2008 at 4:47 pm
Au contraire, my friend, I do not revere financials (except for GS which just has some of the hottest women I have ever seen). I just want my American Dow Jones INDUSTRIAL companies to be, well, industrial, not the purveyors of cheese, soup, and McNuggets.
Pretty soon, Kraft and Campbell’s Soup will merge, combine their unique strengths, and America will be seen as innovative again, inventing unheard-of wonders for the world such as broccoli cheese soup, French onion soup, cauliflower cheese soup, potato cheese soup…
Posted by: CNBC Sucks | Sep 18, 2008 1:27:34 PM”"”"”"”"”"”"”"”"”"”"”"”"”"”"
I can’t argue with you about beautiful women in them office towers.
But it is still good to see the financial sector be delegated to a place lower than
say a Motel chain or the post office.
Since governement was not involved when
the sector was making a killing, they should not get involved when they go belly up.