Steady Dow still a stalwart for investing

The Dow Jones Industrial Average is one of the most widely followed stock market benchmarks in the world. One of the reasons it has been so popular is that it combines simplicity with effectiveness, doing a good job of tracking more comprehensive stock indexes while sticking to a select list of 30 of the most successful U.S. companies.

Stability has been an essential characteristic. The decision to replace General Electric with Walgreens Boots Alliance was the first substitution made by S&P Dow Jones Indices since 2015, and when you go back to the beginning of the Dow’s history in 1896, the average has made changes on only 50 occasions.

Since the Dow expanded to cover 30 stocks in 1928, there have been roughly five dozen stocks replaced. But during much of the 20th century, switches were concentrated largely during periods of economic uncertainty.

Recently, overseers have made replacements on a more regular basis. There hasn’t been a five-year gap between Dow changes since the 1990s, and the average has responded more quickly to changing economic conditions. For instance, the tech boom in the late ’90s prompted an increase in membership of technology stocks. The Great Recession led to changes reflecting struggles in the financial and industrial sectors, including removal of wellknown firms such as General Motors and Citigroup. Even with slightly more frequent changes recently, the Dow remains a stalwart among those looking for reliable blue-chip stocks with proven track records of excellence.