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The Dow Dumped the 3 Winners of 2013

NEW YORK (TheStreet) - In my opinion, the worst decision of 2013 was made by the S&P Index committee when it decided to remove Aloca (AA - Get Report), Bank of America (BAC - Get Report) and Hewlett-Packard (HPQ - Get Report) from the Dow Jones Industrial Average. This decision was announced on Sept. 10 and on Sept. 23 Goldman Sachs (GS - Get Report), Nike (NKE - Get Report) and Visa (V - Get Report) became Dow components.

The Dow lost the aluminum stock just as the company was benefiting from a resurgence of the automobile industry. Alcoa rallied 20% over the last three months since its exit from the Dow.

The Dow lost a "too big to fail" money center bank just as Federal Reserve stimulus was helping the bigger banks shore up their balance sheets. Bank of America gained 10.3% over the last three months.

The Dow lost a computing and imaging solutions giant just as the new CEO was successfully implementing the company's turnaround. Hewlett-Packard spiked 31.1% over the last three months.

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The three new Dow stocks had gains over the last three months, but significantly below the gains of the former Dow members.

Adding an investment bank whose profitability hinges on risky proprietary trading just when the Volcker rule looms makes little sense to me. Goldman Sachs is up 6% since Sept. 23, lagging Bank of America by 4.3%.

Adding a provider of expensive athletic footwear and apparel when Main Street is likely to reduce discretionary spending seems inappropriate. Nike is up 12.1% since Sept. 23, lagging Hewlett by 19%.

Adding a credit card company when the Dow already has one does not make sense either. Once holiday spending ends many consumers will likely keep their credit cards in their wallets. Visa has a gain of 10.1% since Sept. 23, lagging Alcoa by 9.9%.

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AA $11.17 0.00%
BAC $14.56 0.00%
GS $164.11 0.00%
HPQ $12.27 0.00%
NKE $58.94 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

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