The perfect Argument for buying an ETF that mirrors the S&P 500 or DOW rather than trying to pick the winners and losers. For every Amazon that zoomed up, there were a few dozen that bit the dust completely.
3) Amazon in, Walgreens Out
Speaking of the Dow, there’s been a change in the index.
Amazon is in and Walgreens is out.
Apparently, it only took a 178,600% gain since its IPO for Amazon to get the attention of the Dow committee.
What is Amazon’s weighting in the Dow?
2.9%, making it the 17th largest holding. The Dow uses prices instead of market cap to determine its weights, making United Health the largest holding because it has the highest price per share. If market cap weights were used, Amazon would be the 3rd largest holding with a weight of 12.7%.
Interestingly, despite its unusual methodology, the Dow has been highly correlated to the cap-weighted S&P 500 over the years (.95 monthly correlation since Jan 1998). And perhaps more interestingly, the price weighting has not hurt performance, with the Dow ETF ($DIA) actually outperforming the S&P 500 ETF ($SPY) since its inception in January 1998).