Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21
The History of Bitcoin Hard Forks - 10th Apr 21
Gold Mining Stocks: A House Built on Shaky Ground - 9th Apr 21
Stock Market On the Verge of a Pullback - 9th Apr 21
What Is Bitcoin Unlimited? - 9th Apr 21
Most Money Managers Gamble With Your Money - 9th Apr 21
Top 5 Evolving Trends For Mobile Casinos - 9th Apr 21
Top 5 AI Tech Stocks Investing 2021 Analysis - 8th Apr 21
Dow Stock Market Trend Forecast 2021 - Crash or Continuing Bull Run? - 8th Apr 21
Don’t Be Fooled by the Stock Market Rally - 8th Apr 21
Gold and Latin: Twin Pillars of Western Rejuvenation - 8th Apr 21
Stronger US Dollar Reacts To Global Market Concerns – Which ETFs Will Benefit? Part II - 8th Apr 21
You're invited: Spot the Next BIG Move in Oil, Gas, Energy ETFs - 8th Apr 21
Ladies and Gentlemen, Mr US Dollar is Back - 8th Apr 21
Stock Market New S&P 500 Highs or Metals Rising? - 8th Apr 21
Microsoft AI Azure Cloud Computing Driving Tech Giant Profits - 7th Apr 21
Amazon Tech Stock PRIMEDAY SALE- 7th Apr 21
The US has Metals Problem - Lithium, Graphite, Copper, Nickel Supplies - 7th Apr 21
Yes, the Fed Will Cover Biden’s $4 Trillion Deficit - 7th Apr 21
S&P 500 Fireworks and Gold Going Stronger - 7th Apr 21
Stock Market Perceived Vs. Actual Risks: The Key To Success - 7th Apr 21
Investing in Google Deep Mind AI 2021 (Alphabet) - 6th Apr 21
Which ETFs Will Benefit As A Stronger US Dollar Reacts To Global Market Concerns - 6th Apr 21
Staying Out of the Red: Financial Tips for Kent Homeowners - 6th Apr 21
Stock Market Pushing Higher - 6th Apr 21
Inflation Fears Rise on Biden’s $3.9 TRILLION in Deficit Spending - 6th Apr 21
Editing and Rendering Videos Whilst Background Crypto Mining Bitcoins with NiceHash, Davinci Resolve - 5th Apr 21
Why the Financial Gurus Are WRONG About Gold - 5th Apr 21
Will Biden’s Infrastructure Plan Rebuild Gold? - 5th Apr 21
Stocks All Time Highs and Gold Double Bottom - 5th Apr 21
All Tech Stocks Revolve Around This Disruptor - 5th Apr 21
Silver $100 Price Ahead - 4th Apr 21
Is Astra Zeneca Vaccine Safe? Risk of Blood Clots and What Side Effects During 8 Days After Jab - 4th Apr 21
Are Premium Bonds A Good Investment in 2021 vs Savings, AI Stocks and Housing Alternatives - 4th Apr 21
Penny Stocks Hit $2 Trillion - The Real Story Behind This "Road to Riches" Scheme - 4th Apr 21
Should Stock Markets Fear Inflation or Deflation? - 4th Apr 21
Dow Stock Market Trend Forecast 2021 - 3rd Apr 21
Gold Price Just Can’t Seem to Breakout - 3rd Apr 21
Stocks, Gold and the Troubling Yields - 3rd Apr 21
What can you buy with cryptocurrencies?- 3rd Apr 21
What a Long and Not so Strange Trip it’s Been for the Gold Mining Stocks - 2nd Apr 21
WD My Book DUO 28tb Unboxing - What Drives Inside the Enclosure, Reds or Blues Review - 2nd Apr 21
Markets, Mayhem and Elliott Waves - 2nd Apr 21
Gold And US Dollar Hegemony - 2nd Apr 21
What Biden’s Big Infrastructure Push Means for Silver Price - 2nd Apr 21
Stock Market Support Near $14,358 On Transportation Index Suggests Rally Will Continue - 2nd Apr 21
Crypto Mine Bitcoin With Your Gaming PC - How Much Profit after 3 Weeks with NiceHash, RTX 3080 GPU - 2nd Apr 21
UK Lockdowns Ending As Europe Continues to Die, Sweet Child O' Mine 2021 Post Pandemic Hope - 2nd Apr 21
A Climbing USDX Means Gold Investors Should Care - 1st Apr 21
How To Spot Market Boom and Bust Cycles - 1st Apr 21
What Could Slay the Stock & Gold Bulls - 1st Apr 21
Precious Metals Mining Stocks Setting Up For A Breakout Rally – Wait For Confirmation - 1st Apr 21
Fed: “We’re Not Going to Take This Punchbowl Away” - 1st Apr 21
Mining Bitcoin On My Desktop PC For 3 Weeks - How Much Crypto Profit Using RTX 3080 on NiceHash - 31st Mar 21
INFLATION - Wage Slaves vs Gold Owners - 31st Mar 21
Why It‘s Reasonable to Be Bullish Stocks and Gold - 31st Mar 21
How To Be Eligible For An E-Transfer Payday Loan? - 31st Mar 21
eXcentral Review – Trade CFDs with a Customer-Centric Broker - 31st Mar 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Dow Stock Index Embrace of Apple Reveals New Paths to Profits

Stock-Markets / US Stock Markets Mar 12, 2015 - 02:12 PM GMT

By: Money_Morning

Stock-Markets

Michael E. Lewitt writes: The announcement last week that Apple Inc. (Nasdaq: AAPL) would replace AT&T Inc. (NYSE: T) in the venerable Dow Jones Industrial Average's 30 top companies reflects an important trend that investors can play to their advantage. Today, I'll tell you how.

Previously, the biggest shake-up of the Dow came in September 2013 when Goldman Sachs, Nike, and Visa knocked out Alcoa, Bank of America, and Hewlett-Packard.


If you see a pattern, you are correct. The Dow is moving in the direction of tracking the new, consumer- and intellectual property-driven economy. Replacing AT&T with Apple is a logical step in that direction.

It's all a piece in a critical trend I see coming that will change the way we think about investing.

For those who want to look to the future (Apple) and slough off the past (AT&T), this is a key time to act. Here's how.

Apple Defines the Digital Future

The Dow was established by The Wall Street Journal editor and Dow Jones & Company cofounder Charles Dow. It was first calculated on May 26, 1896, and has always included only 30 stocks compared to the much broader S&P 500 index, which of course includes 500 stocks.

Given the dynamics of the market over the last 100-plus years, changes to the Dow were inevitable. In fact, this is not the first time AT&T has been bounced out of the Dow. It first entered in 1916 as American Telephone & Telegraph but was kicked out in 2004, only to rejoin a year later after merging with SBC Communications.

It's inevitable that the Dow will continue to change. But frankly, it is surprising that it took as long as it did to include the world's most valuable company – and its most iconic consumer brand and symbol of technology – in the world's most famous stock index.

With a market cap of well over $700 billion (it peaked most recently at about $750 billion), Apple exercises forceful influence on the direction of the markets. The company's value has skyrocketed from $26 billion in 2000 as its cultural significance has also grown in ways that few other companies can rival.

Few people remember today that the company was on the verge of extinction in the 1990s and had to ask Microsoft Corp. (Nasdaq: MSFT) for a financial life-line in order to survive. Despite the rivalry between Bill Gates and Steve Jobs, Microsoft helped Apple survive and the rest, as they say, is history – a history for which we should all be thankful.

Ironically, the company that Apple is replacing in the Dow 30 has also played an instrumental role in Apple's success. Approximately 70% of Apple's business comes from its iconic iPhone, and one of the companies that helped it sell so many iPhones and revolutionize the smartphone business was AT&T.

Yet AT&T has struggled to compete with smaller rivals such as T-Mobile Us Inc. (NYSE: PCS) and Sprint Corp. (NYSE: S) in a highly competitive pricing environment and, like many companies in the space where technology and media intersects, has looked to other products such as tablets for growth.

While AT&T has helped enable Apple achieve its dominance, it has been left in the dust financially by the company cofounded by Steve Jobs. And while Apple's enormous financial power and influence may currently be centered on the iPhone, it springs from the fact that the company has disrupted not only the telecommunications industry but the music industry, the book industry, and is attempting to do the same to the television and watch industries.

The iPhone may be a piece of hardware, but in a world where the lines between hardware and software are increasingly blurred, Apple has mastered the art of disruption to reshape the world in its image.

How to Profit from This Trend

Perhaps AT&T could have done the same had it been led by a visionary leader like Steve Jobs. But such a leader comes along very rarely. AT&T controlled the wirelines that carry data and was in an ideal position to dominate the wireless business as well. It remains a formidable player in those businesses. But unlike Apple, which started as a computer company but burst those bounds to become so much more, AT&T was never able to reinvent itself and move beyond its core competencies.

Here's the key takeaway:

AT&T was never able to understand that the essence of the digital economy is the breaking down of the boundaries between traditional industries.
Click here to read more.

A telephone company does not have to be just a telephone company. A computer company does not have to be just a computer company. Any company can compete in other businesses because digital technology empowers it to do so.

Steve Jobs understood that and led Apple to revolutionize the music business with the iPod and iTunes. Then he turned his attention to the telephone business and created the iPhone, which also happens to be a computer, a camera, and a hundred other things.

AT&T was left with its mouth hanging wide open as a follower but not a leader in Jobs' revolution.

One of the miracles of the new breed of companies that have been born since the Internet Age like Apple, Amazon.com Inc. (Nasdaq: AMZN), Netflix Inc. (Nasdaq: NFLX), Alibaba Group Holding Ltd. (NYSE: BABA), Softbank Corp. (OTCMKTS: SFTBY), and even Tesla Motors Inc. (Nasdaq: TSLA) is that they won't allow themselves to be confined to a single industry. And that is why companies such as these will end up in the Dow in the years to come, and they are where we should put our investment dollars to work.

They have learned that the digitalization of the economy allows them to be more than a computer company or an e-commerce company or a streaming video company or an automobile company – they can be multiple companies combined. That is the miracle of digital technology in the hands of a visionary entrepreneur. Companies that don't understand the new DNA of the digital world will get left behind.

That is what the replacement of AT&T by Apple in the Dow represents.

"In with the new!"

Source :http://moneymorning.com/2015/03/12/dows-embrace-of-apple-nasdaq-aapl-reveals-new-paths-to-profits/

Money Morning/The Money Map Report

©2015 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules