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Dow Picked Goldman Sachs, but Investors Should Pass

NEW YORK ( TheStreet) -- Recently the Dow Jones Industrial Average (DJIA) removed three stocks from its membership roster and added three new stocks in their place. The stocks that were kicked out: Alcoa (AA - Get Report), Bank of America (BAC - Get Report) and Hewlett-Packard (HP - Get Report). The stocks added: Visa (V), Nike (NKE) and Goldman Sachs (GS - Get Report).

I wrote about this change in another publication and why, in my opinion, it took so long for Visa to be added. I also analyzed the worthiness of Visa as a Dow member. Ultimately, what I determined is that Visa is a great stock that is worthy of the Dow, and its membership has been a long time in the making.

But what about Goldman Sachs? Why was it finally chosen as a DJIA member and is it actually worthy?

Data from Best Stocks Now App

Goldman Sachs has been around a long time -- since 1869 -- which leads back to my question: Why now, Dow Jones?

Headquartered in New York City with offices in major financial cities across the world, GS is a global investment banking and management and securities firm that provides a varied range of financial services to the likes of corporations, financial institutions and governments, as well as high-net-worth individuals.

GS falls into the financial sector of the market. So far in 2013, the financial sector has had pretty mediocre performance. In fact, currently, I give the financial sector a grade of B-.

Data from Best Stocks Now App

GS is a $75 billion company. It is a large-cap stock. Large-cap stocks also have had pretty mediocre performance in 2013. Currently, the large-cap stock asset class gets a grade of B.

Data from Best Stocks Now App

GS is a stock geared toward conservative risk-profile investors.

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AA $11.15 -1.40%
BAC $14.82 -1.40%
GS $164.36 -1.50%
HP $64.92 -0.05%
AAPL $94.66 -3.20%


Chart of I:DJI
DOW 17,820.48 -221.07 -1.23%
S&P 500 2,075.31 -19.84 -0.95%
NASDAQ 4,808.5970 -54.5440 -1.12%

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