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The Dow’s Phony New High
by Michael Nystrom
Tuesday October 3, 2006
Cambridge, MA
The Dow closed at its highest level ever today, and the mainstream press will certainly have a field day celebrating. This is BIG news — the kind you see recycled every half hour on CNN Headline News® until you’re both thoroughly sick of it and also thoroughly brainwashed. Big, shallow news.
At 12:33pm EDT today, Marketwatch.com breathlessly reported:NEW YORK (MarketWatch) — It took nearly 7 years, but the Dow Industrials has erased the memory of the post-millennium bear market by reaching a fresh all-time high on Tuesday…
But look beyond the headlines, and you see a different story. While the Dow hit a new high today, not a single of its component stocks did. Interesting, isn’t it? The index is at a new all time high, but 70% of its components are down 20% or more!
The Dow Jones Industrial Average is composed of 30 stocks. Of these, fully one third of them — 10 stocks — posted their all time highs last century: Coca Cola (KO) and Dupont (DD) in 1998; and McDonalds (MCD), Walmart (WMT), Honeywell (HON), IBM (IBM), Pfizer (PFE), Verizon (VZ), AT&T (T), and Microsoft (MSFT) back in 1999 — seven years ago. Ten stocks made their all-time highs in 2000: Citicorp ( C), JP Morgan (JPM), Walt Disney (DIS), American International Group (AIG), General Electric (GE), Hewlitt Packard (HPQ), Home Depot (HD), Merck (MRK), General Motors (GM), and Intel (INTC).
Only 7 stocks made their new high in 2006, and of these only 3 of them are within 5% of their new high today. 21 of the 30 Dow stocks — that is 70%, folks! — are down 20% or more!
See for yourself in this chart:
Dow Stocks Record Highs, Year Achieved and Percent Away Stock Symbol All Time HighYearPrice — 10/3/2006% From HighProcter & Gamble PG 62.85 2006 62.27 1% American Express AXP 56.19 2006 55.90 1% United Technologies UTX 66.39 2006 64.84 2% Johnson & Johnson JNJ 70 2005 65.48 6% Exxon Mobil XOM 71.22 2006 65.45 8% Boeing BA 89.59 2006 81.75 9% Citigroup C 55 2000 50.08 9% Altria MO 85 2006 75.56 11% 3M MMM 90 2004 74.00 18% Caterpillar CAT 82.03 2006 65.28 20% McDonalds MCD 50 1999 39.67 21% JP Morgan JPM 65 2000 47.68 27% Walt Disney DIS 44 2000 31.00 30% Wal Mart WMT 70 1999 49.39 29% American Int’l Group AIG 104 2000 66.69 36% Honeywell HON 68 1999 41.90 38% Alcoa AA 45 2001 27.05 40% General Electric GE 61 2000 35.74 41% IBM IBM 138 1999 81.68 41% Pfizer PFE 50 1999 28.41 43% Verizon VZ 68 1999 37.44 45% AT&T T 60 1999 32.57 46% Hewlett Packard HPQ 69 2000 37.42 46% Home Depot HD 70 2000 36.85 47% Coca-Cola KO 88 1998 44.56 49% Dupont DD 85 1998 42.95 49% Merck MRK 90 2000 42.00 53% Microsoft MSFT 60 1999 27.36 54% GM GM 94 2000 33.14 65% Intel Corp INTC 76 2000 20.57 73% Removed Components International Paper IP 61 1997 34.70 43% Eastman Kodak EK 92 1997 22.16 76%
(A note on methodology: While it is easy to find a stock’s 52 week high, finding its all time high is a little more difficult. The way I did it was to pull up a ten-year chart of each of the Dow stocks on Big Charts and eyeball it. That is why you see a lot of round numbers for those old all time highs. While not exact, it is close enough for the purposes of this exercise.)
The Dow's Phony New High, read it
18 februari 2007, 09:00
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