Buying the Dow Stocks

By Dian Vujovich

Another month has flown by and with it some of our money.

A look at how the 30 stocks that make up the Dow Jones Industrial Average have performed over the past month show some interesting results. For openers, AIG completed a 1-for-20 reverse split. Reverse splits are typically the kiss of death for companies. The change in this instance meant that someone who owned say 1000 shares of this government bailed out company prior to the reverse split would now own 50 shares.

At the market’s close on Thursday, July 9, 2009, AIG closed at 9.48 per share. Those hypothetical 50 shares would then have been worth $474. That’s well below the approximately $1000 to $1300 one would have had had the company not imposed the reverse split —that of course is assuming the stock would have continued trading within the range it had over the past few months.

But heck, AIG must be special. News from a Washington Post.com story this morning revealed that the insurance giant wants to spend $2.4 million in bonuses for over three dozen of its high-ranking executives. (Source: http://tinyurl.com/mhgmtn )

As for other stocks and my how-much-does-one-share-cost monthly review shows that as of last night’s close, three stocks were trading under 10 bucks a share; Citicorp, $2.69 per share; Alcoa at $9.23; and AIG, $9.48. Buying one share of each, sans commissions, would have run you $21.40.

There are now a total of eight stocks trading under 20 bucks a share. In addition to the three just mentioned are General Electric, Bank of America, Intel, Cisco Systems and Pfizer. Purchasing one share of all eight would cost $92.71, sans commissions.

Decide to purchase one share of all the 30 stocks and you’d have to pony up $1030.09, based on yesterday’s closing prices. That’s $1 less than the May numbers showed.