Courtesy of Pam Martens
Jack Welch, Former CEO of General Electric Co.
General Electric Co. (GE) will be unceremoniously sacked from the Dow Jones Industrial Average on June 26, it was announced yesterday by the S&P Dow Jones Indices folks. GE was one of the original 12 companies in the index when it was created in 1896. The Dow now consists of 30 companies and GE has been in the index continuously since 1907.
Curiously, GE – an industrial giant that makes highly sophisticated commercial jet engines for Boeing and turbines for power plants among numerous other lines of business – will be replaced in the Dow by a retail drugstore chain, Walgreens Boots Alliance (WBA).
GE’s exit from the Dow has a lot of the same hallmarks as the exit of Citigroup from the Dow. Citigroup got the same one-week notice that GE is getting. The announcement came on June 1, 2009 and Citigroup was booted exactly one week later on June 8, 2009.
The stock of Citigroup was cratering at the time, similar to how the stock of General Electric has been doing over the past year. When Citigroup was yanked from the Dow in 2009, its shares had lost 90 percent of their value over a period of two years, bottoming out at 97 cents on March 5, 2009 in the midst of the financial crisis.
In January of 2017, GE was trading at $30. It closed yesterday at $12.95 – a decline of 57 percent in a year and a half.
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