"Might the Remaining "Ten Titans" Shares be Included in Dow Jones by the Year 2030?"
The Dow Jones Industrial Average (DJIA), a symbol of American economic might, is undergoing a period of potential transformation. Comprising 30 industry-leading U.S. companies from various sectors, the DJIA currently includes four of the so-called "Ten Titans" - Nvidia, Amazon, Microsoft, and Apple. However, it seems that the DJIA may be seeking to expand its horizons.
One of the notable changes being discussed is the possible addition of Alphabet, the parent company of Google and YouTube. Alphabet offers tech exposure through its growing cloud business and a key media play in YouTube. If added, Meta Platforms (Facebook) might not be before 2030.
The DJIA's current underrepresentation in the communication services sector is another area of interest. This sector, which makes up just 2.3% of the DJIA's value but 9.9% of the S&P 500, could see shakeups. Netflix for Disney, or even Tesla for Nike, could be potential picks, considering Tesla's absence from the DJIA, its status as the most valuable automaker, and its exposure to robotics and renewable energy.
Another significant change could be the departure of Verizon Communications from the DJIA. Its removal would reflect the DJIA's ongoing shift towards technology and away from traditional industries.
Meanwhile, the automotive sector is noticeably absent in the DJIA, with no automakers currently present. However, Tesla's absence and its status as the most valuable automaker could make it a potential pick.
Honeywell, added to the DJIA in 2020, might be on its way out. With Honeywell splitting into three separate publicly traded companies by the end of next year, it may make sense to replace Honeywell altogether in the DJIA, considering Boeing is already a component.
The DJIA's composition changes could be a reflection of what's driving the stock market and the underperformance of the DJIA compared to the S&P 500 and Nasdaq over the past decade. The DJIA, being a price-weighted index, is known for its tendency to favour high-priced stocks, which could be contributing to its underperformance.
Broadcom, a more diversified business compared to Nvidia, could replace Cisco Systems in the DJIA. Broadcom offers networking equipment, security solutions, infrastructure software, data center hardware, AI accelerator chips, and application-specific integrated circuits for AI functions.
The Dow Jones may also consider picking the automation business or the aerospace business from Honeywell to remain in the index.
Over the last five years, six of the 30 components in the DJIA have changed. This ongoing process of evolution reflects the DJIA's adaptability, as it continues to reflect the changing face of the American economy.
As for the German stock market, it's the prominent mid-sized German firms such as HelloFresh, Brenntag, and Symrise that are most likely to join the DAX in the coming years, due to their market capitalization, growth prospects, and increasing importance in the German economy.
In conclusion, the Dow Jones Industrial Average is undergoing a significant period of change, with potential additions such as Alphabet, Tesla, and Broadcom, and possible departures like Verizon Communications. These changes reflect the evolving nature of the American and global economy, as technology continues to play an increasingly important role.
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