Posts filed under “Technology”
I want to address the addition of Apple to the Dow Jones Industrial Average, so we have to get a few things out of the way up front.
The venerable Dow isn’t really all that important. It began life on May 26, 1896, but in the last 30 or so years, it has faded in significance. It remains deeply flawed in its methodology, driven rather arbitrarily by the price weightings of its constituents rather than their market values.
You can see how this affects the weighting of each component in the index. Companies with higher stock prices such as Visa and Goldman Sachs have a 9.7 percent and 6.7 percent weight, respectively, while lower-priced stocks such as Cisco Systems and General Electric are merely 1.05 percent 0.91 percent, respectively. Why Goldman Sachs, with an $84 billion capitalization, matters more to the Dow than General Electric, with a $257 billion capitalization, is rather mystifying. A high-priced, smaller company carrying more weight than a lower-priced, bigger company makes no sense.
Not only that, but it is an actively selected — though not actively traded — portfolio, managed by a group of editors. Originally these editors were employees of Dow Jones, the company, but since 2012 the index has been 73 percent owned by McGraw Hill Financial. The CME group, which had purchased the index from Dow Jones in 2010, owns 24.4 percent; Dow Jones retains the remaining 2.6 percent stake.
I can’t think of these strange bedfellows now in charge of selecting Dow components without being reminded that a camel is a horse that was designed by a committee.
What qualifies a company to be included in the Dow? According to theDJ Index fact sheet, a “stock typically is added only if the company has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors.” (The full history of additions and deletions can be seen here). But that description is so broad as to be almost useless. There are hundreds of companies with those qualifications.
Why Apple, and perhaps more importantly, why now?
“Gartner: iPhone 6 and iPhone 6 Plus drove Apple past Samsung in Q4 worldwide smartphone sales”: bit.ly/1FSBUKu Get rid of the removable battery and microSD card? That’s like kicking out the drummer and the bass player, hard core fans are not going to like that. Tech is not like music. In music it’s about establishing…Read More
A 240 year old doll that can write, a clockwork creation by Pierre Jaquet-Droz, a Swiss watchmaker. The doll is able to write any custom text up to 40 letters long, and it uses a goose feather to write, which he inks from time to time, including a shake of the wrist to prevent ink from spilling. His eyes follow the text being written, and the head moves when he takes some ink. You can view this doll in person at the Musée d’Art et d’Histoire of Neuchâtel, in Switzerland.
MVNO: Mobile Virtual Network Operator
Google Inc. (GOOGL) announced yesterday that it plans to unveil a new wireless service within the next few months. The service would be small and available within the U.S, and it is intended to integrate with Android products. Google’s already-strained relationship with the telecom industry could widen if the product is perceived as a threat to wireless carriers like Verizon (VZ), Sprint (S) and AT&T (T).
Google to Big Telecom: Work with us or perish