Monthly Dow Check-up
By Dian Vujovich
Diversification is one of the main tenets behind the building of a sound investment portfolio. Ideally, the right diversification minimizes risk. The tricky part is putting together the right combo of stocks from the many asset classes, industries and countries around the world we’ve got to choose from. Let’s not even touch how much of the international markets’ representation ought to be a part of one’s portfolio, or commodities or fixed-income securities. It’s all so much to consider.
In the spirit of simplicity, as you know I’ve been watching the 30 stocks in the Dow ever since May. That was when four of them were selling under 10 bucks a share and seven (including those four) under $20.
Those days are gone—who knows for how long– and so are two of the companies that were a part of the DJIA, Citigroup and General Motors. In June, Travelers and Cisco replaced.
I couldn’t help but think about diversification when I looked at the Dow 30’s closing pricing on Friday, September 11th. None closed under $10 a share but there are now five that closed under $20.
They include, in alphabetical order, Alcoa (AA) at $12.99; Bank of America (BAC) at $18,97; General Electric (GE) at $14.67; Intel, at $19.51; and Pfizer (PFE) at $16.25.
Decide to purchase one share of each and it would have run you $80.39 sans commissions. Had you bought one share of that same combo in May, you’d be up 33 percent. (The tariff the would have been $60.47 sans commissions.) When stocks move upwards sometimes it’s quite impressive.
Now I’m not suggesting that anyone buy any of those stocks, but I do like looking at stuff and slicing and dicing things. When I looked at the five under 20, I thought about what a diverse lot they were. One is a major bank; another a conglomerate that includes financial services, news and information services and generates power; another the world’s largest producer of aluminum; another a world tech leader in processor technologies and silicon innovation; and one is said to be the world’s largest research-based pharmaceutical company.
Makes me think about how great the companies in the Dow really are. And many selling for cheap, I think.
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