https://www.usatoday.com/story/money/2018/06/19/ge-removed-dow-jones-industrial-average/715985002/
GE’s troubles are making a name for themselves, and not in a good way.
…Being replaced by that industrial powerhouse Walgreens. Over the years many companies are removed and new ones added to the Dow Industrial Average list. That makes it easier for some financial planners to push mutual funds. They point out how the DOW has beat inflation over the years.[D)]
Jack Welch had employees rated and the top 10% got good raises, the 80% in the middle got average raises and the bottom 10% got no raise. Looks like GE got into the bottom 10%.
Probably, a remark that should go down in the annals of understatement!
General Electric has literally been a ‘powerhouse’ in the American economy since it was formed, under the hands of Thomas Edison and Charles Coffin by banker J.P. Morgan around 1892. General Electric seems to have reached its peak in and around 2000(?) . It was known as the ‘House that Jack Built’. ["…The contrast of GE circa 2017 with “The House that Jack (Welch) Built” could not be more different. Since its peak in 2000, GE’s $410 billion market capitalization has shrunk to $156 billion, down $254 billion (62 percent). During his twenty years at the helm, Jack Welch increased GE’s market value twenty-eight times, making GE America’s most valuable corporation. He expanded GE through internal growth and acquisitions, especially in GE Capital, as GE hit every quarter while investing for the long-term. For these results Fortune Magazine named him “Manager of the Century…”]
Jack Welsh moved aggressively as soon as he took over in 1981. Recognizing GE needed to be much leaner, and faster-moving to compete globally in the 21st Century, Jack Welch slashed its bloated corporate staff, cut several layers of management
IMHO the Dow has often picked new companies that are undervalued set point for insertion into the Dow. Complete stock indicies are much more indicative to the total market. The dow near 24,000 may have that index sweating tears.
The Dow is nothing more than a ‘feel good’ index for the past 50 years or so. These days, they ‘cherry pick’ the strongest of the strong companies in the US and move them into the DJII, while simultaneously removing the weaker, ‘non-performing’, and even failing stocks such as Eastman Kodak. When initially created, the DJII truly reflected the ‘industrial’ society that was growing stronger by the day in the US. In short, GE is not generally moving upward, so they’ve replaced it with one that is, WAG.
Has anyone reconstructed the DJI with the Original companies and/or their decendents? What would that index be reading at this point in time?
I remember when the Dow had the 30 “Industrials” Index; and the 15 “Rails” index which I think became the “Transportation” index; and IIRC the “Utilities” index
Heh, not quite that gentle. Even though it was not Welch’s intent the bottom 10% got fired at GE via periodic layoffs. Same thing happened at a number of large companies that attempted to copy him including IBM. It’s called the Vitality curve and actually it was rife with corruption, score settling, HR issues because of the certainty the lower 10% would be fired no matter what. Very bad system. Welch attempted to defend it later by saying he was misinterpreted and the lower 10% were to be coached until they achieved a higher rateing…which of course was absolute BS, he trully meant for the lower 10% to get terminated because that is how he grew up in Sales and Marketing.
The problem over time of firing your bottom 10% each year is over 10 years you generate a lot of turnover and you have lost a good portion of your institutional memory of how the business is run as well. Also there are the kizz arse managers that want to up it to the bottom 20% or 25% which makes turnover an even larger issue.
https://en.wikipedia.org/wiki/Vitality_curve
GE’s real problem of course is they lost their way with Immelt and still do not quite know what kind of company they want to be. Right now inside GE Is total chaos and that is why their stock has not reached bottom yet. Same thing happened to EDS after Ross Perot left. Alberthal was able to keep his head above water for a few years after Ross left but then he gave up on running the business and started to focus on retirement…his last 5 years were a disaster of large clients tearing up their EDS contracts, which got
The original index of 1986 was only 12 companies: American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, General Electric, Laclede Gas, National Lead, North American, Tennessee Coal and Iron, U.S. Leather pfd. and U.S. Rubber.
GE was the last of the first Dow 30 Industrial of 1928. Its members were:
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Allied Chemical and Dye Corporation |
Sears Roebuck & Company |
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American Can |
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American Smelting & Refining Company |
I take it you mean 1886?
I don’t do the stock market, but it is a regular part of the nightly news, etc. In the sixties, in sixty’s dollars, the average was below 1000. In today’s dollars it was in the mid 6,000’s.
Now, of course, it’s up around 24,000 - which in 1968 dollars would be about 3,300…
Ah, numbers…
Yes. typo. thank you.