Post #83 by mechinv on the Index Investing board

Investment Strategies / Index Investing

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Amazon got added to the Dow yesterday, replacing Walgreens. This is likely one of the reasons why AMZN was up about 1% today.

The Dow is a funny index because it's weighted by the stock's price, not its market cap. Which makes no sense. It means, for example, that Caterpillar has a higher weight than Apple :) Go figure.

When AMZN was trading around $3,000/sh pre-split, there was no way it could have been added to the DJIA. The price would have blown all the other components away into insignificance. But at $168/sh post split, it will have a weight somewhere between J&J and Walmart.

Also, Uber got added to the Dow Transport index. Wasn't too long ago that Uber got added to the S&P 500 index, as I mentioned in a previous post.

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