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Message: [QUOTE="DavidinNaples, post: 2309398, member: 3537"] I wrote this basic summary for clients. Thought some on the BY might enjoy. Yes, I'm very bored waiting for this season to start...;) [B]When the “stock market” reaches a new record high, not every stock goes along for the ride. [/B]This is especially true for the Dow Jones Industrial Average, commonly called the Dow. In early August, the Dow set an all time record by reaching 22,179. The average has backed off only 1.6% since that high, but many of the 30 stocks that make up the Dow are doing far worse. For example, G.E. currently sits at $24.49 per share, a full 24% off its’ highest levels of the last 12 months. Cisco Systems is off 9.1% over that same period and Pfizer is down 5.2%. So how is the Dow setting and holding close to record highs with stocks like G.E., Cisco and Pfizer doing so poorly ? [B]The 30 stocks in the Dow are “price weighted” and impact the average very differently. [/B]For example, Apple has a price of $159.86 per share and represents 5% of the Dow. Intel, on the other hand, has a price of $34.67 and is only 1.8% of the Dow. The highest priced stock in the Dow is Boeing, at $235.89 per share, and it represents a whopping 7.5% of the total of the Dow average. [U]Boeing is up 53% so far in 2017, more than offsetting the lousy performance of the three smallest Dow components (GE, Cisco & Pfizer), which together total only 2.72%[/U]. So if the biggest stocks in the Dow do well, it kind of doesn’t matter what the tiny ones do. Apple is the 5th largest Dow stock and it is up 38% this year. 3M is the third highest priced stock, at $202 a share, and it has climbed 13% since January. The story is the same with the 6th largest stock in the Dow, McDonald’s, which is pennies away from the all time high of $159.98 and up 30.3% for the year. Together, these big Dow stocks have raised the whole average by 10.6% for 2017, even with some smaller stocks underperforming. [B]The better a stock in the Dow performs, the more impact it has on the whole Dow average. [/B]For example, Boeing was only priced at $131 a year ago, making it the 10th largest stock in the Dow. As the top performing stock in the Dow this year, BA has now risen to #1. [U]The more the price goes up, the more it influences the Dow[/U]. The reverse is true for poor General Electric. Priced at $24, it has 1/10th the influence of Boeing, on any particular day. Most days, some of the Dow’s 30 stocks go up, while others fall in price. What matters most is which ones are up for the day, and which are dropping. [U]Friday, the Dow was up only 31 points despite 22 stocks rising and only 8 falling[/U]. That was because Boeing fell over 1%, Goldman Sachs slipped just over 2/10ths of 1% and United Health was off 2/10ths as well. Those three are all in the top four largest stocks in the Dow. Together, they nearly offset the 22 stocks that had a good day on Friday. [B]With oil rising to $48 per barrel, the 10 year U.S. Treasury yield falling again to 2.16% and Washington gearing up for a tax reform push, the stock market may be ready to try for a new high. [/B]Then again, that will depend on how well the top 15 stocks in the Dow perform. Those stocks, which include Boeing, Goldman, 3M, UNH, Apple, McDonald’s, Home Depot, IBM, J&J, Travelers, Caterpillar, UTX, Chevron, Visa and Disney make up 71% of the Dow. The bottom 15, together only represent 29% of the Dow average. In the Dow, size matters… :cool: Go Dow..!! :D [/QUOTE]

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