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AAPL to replace T in the DOW
Old 03-06-2015, 08:21 AM   #1
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AAPL to replace T in the DOW

Just bought a large block of T. Stocks that are removed from the DOW have done very well six to 12 months later.
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Old 03-06-2015, 08:30 AM   #2
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I was remembering all of the tech stocks that have been added to the DOW since the late 90s and how that was often the stock peak. So I am thinking hard about this!

It does seem like a good buying opportunity for T.
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Old 03-06-2015, 08:38 AM   #3
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Last 3 removed were BAC, HP and AA: All 3 are beating the DOW performance since. HP x 3. AA nearly x 2.


It is counter intuitive. Which is the sweet spot.
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Old 03-06-2015, 10:57 AM   #4
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Originally Posted by ERTX View Post
Just bought a large block of T. Stocks that are removed from the DOW have done very well six to 12 months later.
So, this sounds like speculating to me.

Can you provide some statistics to make it seem less speculative?

Just curious.
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Old 03-06-2015, 11:26 AM   #5
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The question I would have is have they beat the replacement


By being 30 stocks, it is almost assured that any gains or losses will be muted by some poor or good performers.... and since the Dow usually goes up in any 6 to 12 month time period.... well... just simple avgs...
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Old 03-06-2015, 11:39 AM   #6
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I have both AT&T and Apple, so for me I guess it's a wash. I'm just gonna sit and do nothing. Maybe buy a bit more on the lows, sell a bit on the highs.
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Old 03-06-2015, 12:14 PM   #7
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So, this sounds like speculating to me.

Can you provide some statistics to make it seem less speculative?

Just curious.
All ready did, re: post #3.

Last 3 removed were BAC, HP and AA: All 3 are beating the DOW performance since. HP x 3. AA nearly x 2.
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Old 03-06-2015, 12:21 PM   #8
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Stocks that are removed from the DOW have done very well six to 12 months later.
Those that survive, anyway. Sears, General Motors, AIG, are others that didn't fare so well.
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Old 03-06-2015, 12:35 PM   #9
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Those that survive, anyway. Sears, General Motors, AIG, are others that didn't fare so well.
Good point. Those were tossed because of share price. T is being tossed because with VZ in the index their weighting is now too high.

AAPL was added because of V stock split decreased the tech component of the DOW (price weighted).

An article just crossed, that follows my thought process concerning performance after removal: AT&T shareholders should rejoice at Dow removal
Alcoa is up 75 percent since that exit. Hewlett-Packard, replaced by Visa in 2013, is up almost 60 percent since then. Citigroup, replaced by Travelers in the wake of the financial crisis in 2009, is up 58 percent.
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Old 03-06-2015, 12:42 PM   #10
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I have both AT&T and Apple, so for me I guess it's a wash. I'm just gonna sit and do nothing. Maybe buy a bit more on the lows, sell a bit on the highs.
I sold my AAPL position into that noise and bought $128, $127 and $126 puts. Has fallen over 2% since. I will buy back AAPL if the $119.28 support holds.

Oh, oh, maybe I need to stop posting here, I am getting into full blow trading mode again. I told myself I would just take my dividends and not watch the markets anymore.
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Old 03-06-2015, 12:51 PM   #11
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Good point. Those were tossed because of share price. T is being tossed because with VZ in the index their weighting is now too high.

AAPL was added because of V stock split decreased the tech component of the DOW (price weighted).

An article just crossed, that follows my thought process concerning performance after removal: AT&T shareholders should rejoice at Dow removal
Alcoa is up 75 percent since that exit. Hewlett-Packard, replaced by Visa in 2013, is up almost 60 percent since then. Citigroup, replaced by Travelers in the wake of the financial crisis in 2009, is up 58 percent.
Has anyone compared the performance of all the stocks that are eliminated from the Dow with the Dow index? That would be a more compelling case.
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Old 03-06-2015, 12:51 PM   #12
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The DOW is just noise. The days when the smart money watched the industrials, transportations (née railroads), and utilities is long over. it's just a number that the media likes to mention and means almost nothing. Often it moves more abruptly than the board indexes, so again, the media likes to use it in headlines.

It is worth watching the S&P 500 and other broad indexes to see how the economy is doing. If Dow Jones and Company (part of the Murdock empire now) didn't have a stake in keeping the DOW alive, it would have faded long ago.
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Old 03-12-2015, 03:08 PM   #13
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Has anyone compared the performance of all the stocks that are eliminated from the Dow with the Dow index? That would be a more compelling case.
I'd be interested in that as well.

I wouldn't be surprised though if it pans out: Stocks that leave the DJIA get dumped by trackers and some pension funds, even hedge funds because they have to to comply with their investment policy.

So in the run-up to the actual removal you would expect overselling relative to its intrinsic value. In the longer term this would repair itself.

On the other hand there is a reason why these shares get removed ..

Which effect prevails, interesting to find out.
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AAPL to replace T in the DOW
Old 03-12-2015, 04:56 PM   #14
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AAPL to replace T in the DOW

I have T, and have kept it since around 2006. I'll just keep it as it does pay a steady dividend. Around that time, I was asked to take over management of a mostly-stock trust that had been neglected and over time had gathered a lot of dividends, sitting in a taxable money-market fund. I put some of that cash into AAPL (pre-split, pre-iPhone) and of course it went well for the trust.

I am interested in the DJIA as I've been thinking of starting to withdraw from my own taxable retirement accounts once I get past the 59.5 10% penalty (that is not a recommendation, but may be appropriate for me), and put the post-tax proceeds into individual, steady stocks. "Widow and orphan" stuff (even though I am neither). The Dow components are a source of ideas for that.
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Old 03-13-2015, 09:15 AM   #15
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The DOW is just noise. <snip> it's just a number that the media likes to mention and means almost nothing. Often it moves more abruptly than the board indexes, so again, the media likes to use it in headlines.
I know- at the level it is now, a 200-point drop is a tiny % but the headline is, "The Dow tumbled 200 points..." It's also hard to interpret because the same % swings in the higher-priced stocks have a bigger effect on the index than the same % on the lower-priced ones in the index.

Does anyone know how they go back and restate the Dow when a new stock is added? There are charts showing the Dow from before Apple was even in Steve Jobs' garage. What do those points even represent these days, with so many of the current stocks not existing back then and many of the stocks that WERE in the index gone?
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Old 03-13-2015, 10:50 AM   #16
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I know- at the level it is now, a 200-point drop is a tiny % but the headline is, "The Dow tumbled 200 points..."

THIS is one of the reasons I absolutely HATE watching the news. Any drops in financials results in BREAKING NEWS!!! DOW SLAMMED!!! RECORD LOSSES!!! S&P 500 NOSEDIVES!!! but when there are modest gains the same news is reported (on page 5) as "modest gains in the market", "some experts say slight increases are temporary", "Kardashians renew contract".

It's all so very annoying.
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Old 03-13-2015, 10:58 AM   #17
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THIS is one of the reasons I absolutely HATE watching the news.

...

It's all so very annoying.

"I get the news I need on the weather report"

- Paul Simon, "The Only Living Boy In New York"
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Old 03-13-2015, 11:00 AM   #18
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"I get the news I need on the weather report"

- Paul Simon, "The Only Living Boy In New York"
That's pretty good, but here lately even the weather report has been useless. I really think meteorology has lost it's "art" thanks to all the models that never agree on anything anymore.
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Old 08-04-2015, 08:43 AM   #19
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Just bought a large block of T. Stocks that are removed from the DOW have done very well six to 12 months later.
T up 3.81%
AAPL down 7.28%

Over 11% swing.
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Old 08-04-2015, 09:25 AM   #20
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How much did you make on the Apple puts? It is 114 today. Did you buy back in?
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