When Does GM Get Kicked Out of the Dow, part II
With GM now at 53-year lows, its time to revisit the question. Back in November, we asked "When Does GM Get Kicked Out of the DJIA?"
Let's start a pool: At what point in the future will General Motors (GM) ignominiously join Eastman Kodak (EK), Woolworth and others and get tossed out of he Dow Jones Industrials? And, who will replace them?
I am betting this happens within 5 years, and perhaps even within 3.
As to the replacement, I might have said Google (GOOG) -- but I assume the DJ Editors learned their lesson top ticking Microsoft (MSFT) and Intel (INTC). Instead, my bet will be Cisco (CSCO).
Did I say three - five years? Let's change that to 12-24 months and I still think its Cisco over Google . . .
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Thursday, June 26, 2008 | 02:00 PM | Permalink
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Anyone just catch Cramer on CNBC? The suits told him to be very calm and we got Prozac Jim...they must be in sheer panic. He also said GM is not going to go BK, so you may want to short it now at fresh 53 year lows.
Posted by: Steve Barry | Jun 26, 2008 2:08:35 PM
I do not see this happening
-- Dow has to reflect the "US economy" and some Auto representation is required else it is a poor index. They can relace that with F? I do not think so. TOYOTA -- Opps! That's not made in USA/local company.
I will bet one or two financials getting kicked out of that in next two years
AIG, AXP, BAC, C & JPM -- five out of thiry? that's more than the financials future weight in the economy. Either one of the three banks or AXP gets booted out first.
MHO and I can get a cup of McCoffee on that :)!
Posted by: Nihilism | Jun 26, 2008 2:13:15 PM
I just bought some GM. I like their emerging markets postioning..
Posted by: Vermont Trader | Jun 26, 2008 2:18:56 PM
My bet is on Corning. Plastic is on its way out. Glass is on its way back in. Mirrors are the cheapest way to do-it-yourself back yard energy production. Do the math.
We're beginning to see the switch from an entertainment first society to a premium on getting energy society along with the stop eating cancer causing teflon and plastic society. Look around at all the plastic eating and kitchenware made of plastic. Do the math.
Posted by: AGG | Jun 26, 2008 2:20:36 PM
Now oil is spiking...is Bernanke the boy with his fingers and toes in the dike? Keep calm Cramer.
Posted by: Steve Barry | Jun 26, 2008 2:22:19 PM
Hey Vermont Trader,
Did you buy some IBM too? Essex Junction is changing its' name to Flint. Why don't you buy a nice $400,000 house in Woodlands or Wall Street, Colchester while you're at it?
Posted by: AGG | Jun 26, 2008 2:26:32 PM
AGG - I'm a northest kingdom boy, don't get to the big city much...
I'm also a contrarian and I can't think of a more contrarian stock to buy than GM.
In fact, I'm starting to get bullish..
That's just how I roll.
Posted by: Vermont Trader | Jun 26, 2008 2:33:11 PM
It wouldn't be Google unless they split 10:1 since they would dominate the index otherwise. Cisco seems like a safe bet.
Posted by: Lord | Jun 26, 2008 2:33:27 PM
My 1-cent opinion is that GM will get kicked out when concerns of GM chap. 11 start brewing in the very likely event that GM's 0% financing sales campaign falls flat.
Remember GM's core customers are most likely upside-down on their SUVs and in no mood to change cars. They'll probably just walkaway from their cars hurting GMAC which is already hurting from ResCap.
Chrysler-Cerberus will probably flirt w/bankruptcy too.
F will survive only by the grace of Mullally....
Naturally YMMV.
Posted by: i'm just sayin' | Jun 26, 2008 2:40:28 PM
How about a pool on the first ex-WSJ reporter to write a "tell-all" book about Murdoch's meddling with the news side of the biz? :-)
Posted by: tomd | Jun 26, 2008 2:41:43 PM
Vermont Trader,
Bullish? Stay warm this winter, pal. I've read your posts.
We River Rats in Winooski know how to swim in all the currents. We also know where the waterfalls are. Buy Corning if you want to make real money. GM has been a sell since they started dumping there financing cash cow.
Posted by: AGG | Jun 26, 2008 2:44:52 PM
I say it goes down a little more and the company goes private.
Posted by: rj | Jun 26, 2008 2:46:39 PM
AGG- OK I just bought some GLW.
It better work or you are buying me breakfast at Sneakers..
Posted by: Vermont Trader | Jun 26, 2008 2:49:02 PM
Ooh, also, what if Dow Jones decides to replace GM with News Corp? :D
Posted by: rj | Jun 26, 2008 2:53:51 PM
Next out? P&G - well at least its CEO AG Lafley should be booted out of a Dow firm where he works for what he told the FT...
"... AG Lafley, chairman and chief executive of Procter & Gamble, told the Financial Times he was concerned by the "woe is me and ain't it awful" rhetoric adopted by Hillary Clinton and Mr Obama during their fierce battle for the Democrat nomination.
"In my business we don't need excessive negativism," said Mr Lafley. "You know we are in a business where psychology matters - even in the staples business - and in the economy psychology matters. It could go negative on the economy, that could be a problem . . . We will talk ourselves into a worse recession."
So the Great American capitalist machine is going to get blown off course because of some politcian's hot air? Is Lafley wearing is big blue shoes and matching hair on today or only during interviews? How does he measure this "excessive" negativism's affect on sales? ...by seeing how long it takes to drive his tiny trike around it?
Where was this guy when they were impeaching a President because of a cigar trick? Where was he during the Bush/Rove scare-mongering re Gore, re Kerry? The Twin towers were driven into the ground and we've survived. Vietnam? Nixon? Iranian hostages? Did P&G go under after Pearl Harbor was attacked?
Don't worry Bozo you'll make your bonus this year, you're an American fat cat CEO. Yup, the circus is in town.
Posted by: VennData | Jun 26, 2008 2:57:52 PM
AGG on Corning,
Corning has long history in China, new facilities there, dominates LCD production, history of sharing tech with Japan, Korea, could be a lot of potential there. I've sourced domestic glass manufactures in China and prices are incredibly cheap even with shipping costs. Lots of potential competition but Corning has the brand. INteresting...
Posted by: Sinomania! | Jun 26, 2008 3:04:51 PM
Another CNBC ploy...Dow drops 304...rallies to down 294...announcer will always say "market off its lows now"
Posted by: Steve Barry | Jun 26, 2008 3:06:36 PM
Did I say three - five years? Let's change that to 12-24 months and I still think its Cisco over Google . . .
I'd disagree on either. It's almost a requirement to be a blue chip company to have regular dividends, which neither Google nor Cisco do.
Looking over the current list of DJI stocks, I'd rather place a bet on Dow Jones looking to add representation from a sector that's not either well or currently represented. Like agriculture (ConAgra, Kraft Foods, etc.) or tobacco (Altria, Philip Morris, etc.), before they'd add another high-tech company.
I think we can flatly rule out any financials for the foreseeable future....
Posted by: Ironman | Jun 26, 2008 3:14:15 PM
There is NO blood in the streets..in fact, it's quite tranquil. Stay short until 10 day put/call hits 1.20...looks like this could go on for another month
Posted by: Steve Barry | Jun 26, 2008 3:15:37 PM
Steve Barry:
What are the chances it ends down 400 for the day? 50-50?
Posted by: Joe Klein's conscience | Jun 26, 2008 3:20:57 PM
Vermont Trader,
With all that money you're going to make with GLW you can help your neighbors.
That's all I ask. As to buying you breakfast at SNEAKERS, I don't know you.
Posted by: AGG | Jun 26, 2008 3:23:10 PM
Joe,
It doesn't matter...they could rally it to down 150...all the more for it to drop on next bad news. Follow my chart on when to cover shorts and you'll be fine.
Posted by: Steve Barry | Jun 26, 2008 3:27:04 PM
Proctor & Gamble makes an interesting mouthwash. My dental hygenist recommended it. I used half the dosage and within 7 months began to see ugly stains on my bottom teeth like heavy nicotine stains and I don't smoke. Look up the active ingredient in Crest mouth wash. Great business for dentists who want people rushing in to keep their teeth white. Yeah, Proctor & Gamble is in the perception management for profit business. I stopped using the mouthwash and the stains are gradually fading.
Posted by: AGG | Jun 26, 2008 3:31:03 PM
If GM goes out the boneheads at S&P will toptick a fertilizer, coal, or steel name. Learn their lesson from MSFT? Barry, please!
Posted by: lurker | Jun 26, 2008 3:40:37 PM
GM will get kicked out within 18 months because Dow Jones will not want a company that has filed for bankruptcy to be in the index.
Posted by: Eric | Jun 26, 2008 3:40:58 PM
