CNN Money: “The weird reason that mighty Amazon isn’t in the Dow”

Here’s an excerpt from DataTrek co-founder Nick Colas’ latest quote in CNN Money:

…. “The pressure on companies to split their stock has gone down dramatically,” said Nicholas Colas, co-founder of DataTrek Research.

Still, the fact that Amazon, an $800 billion behemoth that has disrupted bookselling, department stores, cloud computing and groceries, can’t be in the Dow speaks to the limitations of the index.

That’s why sophisticated investors like hedge fund and mutual fund managers pay way more attention to the broader S&P 500. The 500-stock index is weighted by market capitalization, not stock price.

But don’t expect the quirks of the Dow to change its relevance with the average investor.

“The Dow is still the primary measure that Main Street uses to measure Wall Street. I don’t see that changing for a long time,” said Colas”….

Read the whole article here on CNN Money!

 

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