If Apple had joined the DJIA earlier than March 2015, it would not have impacted DOW very much. Its positive impact would have started being felt after January 2011 but the impact would not have been great. Apple is not the top performing component in DJIA. Goldman Sachs is the top performing one for the past one year (to March 2014). The other top performing stocks are 3M, IBM and Boeing. Apple comes 5th.

1. IF APPLE CAME INTO THE DOW
EARLIER THAN MARCH 2015
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Dr. Chip Evans, President & Dziko Thunde, Market Analyst for BlueChipOptions.com

2. IF APPLE CAME INTO THE DOW EARLIER THAN MARCH 2015
SUMMARY
If Apple had joined the DJIA earlier than March 2015, it would not have impacted DOW very much.
Its positive impact would have started being felt after January 2011 but the impact would not have
been great. Apple is not the top performing component in DJIA. Goldman Sachs is the top
performing one for the past one year (to March 2014). The other top performing stocks are 3M, IBM
and Boeing. Apple comes 5th.
METHODOLOGY
I compiled stock prices for 40 individual Dow components that made DJIA for the period spanning
3/21/2005 to 3/19/2015. They were 40 components that either remained, came in or out of Dow in
this period.
The Dow Divisor can also be calculated by dividing the component sum by the Adjusted Close. To
prove the validity of my calculations, I added the stock prices of 30 components that made the index
on a daily basis and divided it by the Adjusted Close and compared the divisor that I got out of this
with the Dow divisors that are recorded on S&P Dow Jones Indices (McGraw Hill Financial)
“Historical Divisor Changes”i
. The divisors do not agree in most places. Probably because the
component stock prices was not accurate like between March 2005 to October 2008, my calculated
divisor was 0.25 while it has always been under 0.16 from the beginning up to now.
The reason why the divisor was above 0.25 is because AIG stocks were priced over $1,000 and this
made the component sum to be over 2,500 in 2005. The actual sum of Dow components only
reached 2500 towards end of November 2013.
DJIA has a fixed number of components To start this analysis, I had to take out one component out
and add Apple to maintain the fixed 30. The choice was guesswork based on the current – Apple has
replaced AT&T. My assumption was that if Apple had replaced AT&T in 2005, what could the Dow
look like from 2005 to 2015.
I gathered data from March 21, 2005 to March 19, 2015 of all DJIA components during this period.
They were 40 in total.
CONSTRAINTS
Incomplete Data
GMC stock prices are only available from 18 November 2010 to date. Prior to that, the data is
missing even though it was in the Dow up to 6/8/2009.Data for Kraft Foods is only available from
9/17/2012 and KRFT came out of Dow on 9/24/2012.
Unadjusted Stock Prices
AIG’s stock prices between 2005 to September 2008 went from over $1000 to less than $100 and
from 2009 have been hanging below $40. AIG stock price gives a misleading DJIA component sum
and Divisor.

3. IF APPLE CAME INTO THE DOW EARLIER THAN MARCH 2015
I complete my analysis in the light of these two constraints, I had to calculate DJIA components sum
using the given Divisor and Adjusted Close which differs from the Divisors I calculated at different
points. Comparison charts have been included to note the variations.
ASSUMPTIONS
The Dow is a price-weighted index meaning that each constituent makes up a fraction of the index
that is proportional to its componentii
. The value of the Dow is not the actual average of the prices of
its component stocks, but rather the sum of the component prices divided by a divisor, which
changes whenever one of the component stocks has a stock split or stock dividend, so as to generate
a consistent value for the index. Since the divisor is currently less than one, the value of the index is
larger than the sum of the component pricesiii
. From 10/1/1928, the DJIA has 30 components which
makes up the index total.
This means that a $1 change in the Dow is equal to $1÷ Divisor. If the Divisor is 0.15571591 then $1
change would be equal to $6.42. If the component sum is 2691.32 (as it at 3/19/2015) then the
Adjusted Close would be 17,959.03 and the Divisor would be 2,691.32÷17,959.03 which equals
0.14985889. Corollary, if we are given Adjusted Close and Divisor, we can get the total sum of
components.
This helped me to correct inaccuracies in AIG stock data. I used the component total realized from
multiplying Adjusted Close with Divisor to get correct DJIA components sum and bypass AIG stock
data.
To see variations in their S&P Dow Jones Indices (McGraw Hill Financial) calculations, I used raw
data: which is daily stock prices of individual components, get their sum and divide it by the Adjusted
Close from WSJ data and got Dow divisors which I compared with the ones given by S&P and see the
variations.
CONCLUSION

4. IF APPLE CAME INTO THE DOW EARLIER THAN MARCH 2015
Looking at the above chart, we can see that on average, Apple is not a high trading stock. IBM and
Goldman Sachs have been trading at prices above $150 from 2011 and 2013 respectively. Others like
3M, McDonalds and Boeing have traded above the $100 mark since 2013 while Chevron crossed that
mark earlier in 2012.
Apple tasted trading above $100 point for a short time in September 2012 before receding to $56 in
July 2013. It made it back in August 2014 and has been hanging on. There are several newcomers
that have crossed that mark in 2015 like Travelers Companies, United Health and Johnson &
Johnson.
The above chart shows how Adjusted Close would look like if Apple had joined Dow in November
2005 replacing AT&T. The chart below shows how Apple would have affected the sum of Dow
components if it replaced AT&T in September 2013 while the one below it shows the effect of the
same assumption but starting in November 2005. A closer look at the November 2005 chart shows
that the Dow would have only start to be positively impacted by Apple from the mid 2010s.

5. IF APPLE CAME INTO THE DOW EARLIER THAN MARCH 2015
The above chart shows how Apple and AT&T performed since March 2005. Apple and AT&T stock
traded around $27 several times in December 2009. This is when Apple was going up while AT&T
was going down and from 2010 onwards, it has risen above the $50 mark to hit $100, come down to
$56 and then steadily risen to as high as $133 in February 2015. AT&T has stagnated between $25
and $39 since their intersection in December 2009.
Among the 13 components in the Dow that have been trading consistently at stock prices above
$100 for a year since March 2014, Apple comes at position number 5 with Goldman Sachs at the top,
followed by 3M, IBM and Boeing shown in the chart below.
i
http://www.djaverages.com/docs-private/level2/djia-history-divisor.pdf
ii
https://en.wikipedia.org/wiki/Price-weighted_index
iii
https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average