In the middle of June, General Electric was kicked out of the Dow Jones Industrial Average, signaling the removal of the last original company used to measure the strength of the American economy.
GE, the Dow’s worst performer in 2018, has been replaced by Walgreens. It has been part of the original index since the DJIA was first created in 1896. Other original members included American Cotton Oil, American Sugar, American Tobacco, Chicago Gas, Distilling & Cattle Feeding, Laclede Gas, National Lead, North American, Tennessee Coal and Iron, U.S. Leather pfd. and U.S. Rubber.
GE’s removal is just the latest in a string of bad headlines for the legacy company, which many investors say has expanded its reach too far for its own good. As one Bloomberg analyst put it, the company’s diversification has made it difficult for its leaders to manage, and a breakup of the bloc into smaller franchises may be its only move.
But, is this really the end for one of the most iconic companies in a century? Or, is there a chance the brainchild of Thomas Edison could find new ways to move forward in a modern, changing economy? Many investors have already given up on what was once the world’s most valuable company, but some are still clinging to hope.
“Since then the U.S. economy has changed: consumer, finance, health care and technology companies are more prominent today and the relative importance of industrial companies is less,” S&P Dow Jones Indices managing director David Blitzer explained.
Learn more about the historical significance of GE’s fall from grace, and what the company could do to remain relevant in the 21st century by watching the video below.
Regards,
Ethan Warrick
Editor
Wealth Authority
