Cisco and Travelers replace GM and Citigroup in the DJIA index

Dow Jones announced today that Cisco (CSCO) and Travelers Companies (TRV) will replace bankrupt GM and quasi-nationalized Citigroup:

After 84 years as one of the Dow Jones Industrial Average's 30 blue-chip stocks, General Motors Corp. was given the boot Monday by Dow Jones and the editors of The Wall Street Journal after the auto giant filed for bankruptcy.

Dow Jones Indexes said Cisco Systems will replace GM on the Dow, while Citigroup Inc. was also given the boot, to be replaced by The Travelers Companies Inc.

GM was one of the original S&P 500 companies and one that stayed in the Dow 30 for 84 years so this is an historic change. A lot of companies get kicked off various indexes but very few make it to the most prestigious, albeit flawed, stock index in the world, the Dow Jones Industrial Average—and very few survive for more than 30 years.

I think the addition of Cisco makes sense. A sizeable chunk of the American economy consists of the technology industry and it's about time someone like Cisco made it.

Citigroup was also kicked off and I don't approve of that decision. Interestingly, the new replacement, Travelers Companies, was spun out of Citigroup a few years ago. I'm not really sure that a financial company, in this case an insurance company, should have been added. Travelers also has a somewhat moderate market cap of around $25 billion, whereas the distressed Citigroup is worth around $20 billion according to the market.


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