With General Motors sinking to one of it’s lowest prices in a few decades, many people are starting to question whether the automaker still belongs in the Dow Jones Industrial Average. Considering that GM continues to lose market share to other rivals, it appears less and less relevant, and a comeback is not very close on the horizon, if they’ll ever be able to fully bounce back to their former glory at all.
A recent article over at CNN made this case as well:
“I realize that GM still employs a large number of people. And even though its stock has plunged, GM is expected to generate $179 billion in sales this year.
But the Dow can still have an automotive component if the editors at The Wall Street Journal – who decide who’s in and out of the Dow – just looked beyond Detroit.
GM is continuing to lose share to Japanese rivals Toyota (TM) and Honda (HMC). While the editors at the Journal have maintained that the DJIA is only for American companies, I think that’s a view whose time has passed.”
It’s true that Toyota may make a more fitting addition to the Dow, but that would mean a nonamerican company would be in the index, further ingraining the idea that the economy is in fact going global.
Out with the old, in with the new.