Henry Blodget, the analyst who gained fame for panning his own Internet stock picks at Merrill Lynch, has a bone to pick with the keepers of the Dow Jones Industrial Average.
Investors would have been far better off if the folks who created the first Dow 30 back in September 1928 had left strict instructions never to mess with it, Blodget contends.
Citing a reader of his blog, Blodget notes that the Dow, with those stocks still in it, would have topped out at just over 30,000 in October 2007 and would have finished 2008 at 14,600.
“Those Dow people can't stand having crappy stocks mucking up their index,” he writes.
“That's why they added Microsoft and Intel at the peak of the tech bubble and booted Chevron and Goodyear to make room and then added Chevron back eight years later, when it was up 60 percent.”
Even at its diminished levels now, some experts say the index, as constituted now, has more room on the downside.
“I think the rally will peter out when negative factors come out,” David Roche, global strategist for Independent Strategy, tells CNBC.
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