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Three's a charm? Not so much with the Dow

Tuesday, 10 Sep 2013 | 12:35 PM ET
Debi Bishop | E+ | Getty Images

Not all good things come in threes.

On Tuesday, the Dow Jones industrial average rejiggered its index, removing Alcoa, Bank of America and Hewlett-Packard. In their place come a new trifecta of Goldman Sachs, Nike and Visa.

Dow Curse

Date Added Company 1-Year
Later
Removed
9/24/2012 UNH UnitedHealth 32.60% Kraft Foods
6/8/2009 TRV The Travelers
Companies
11.80% General Motors
CSCO Cisco Systems 15.50% Citigroup
9/22/2008 KRFT Kraft Foods -19.90% American
International
Group
2/19/2008 CVX Chevron -5.90% Altria Group
BAC Bank of America -71.50% Honeywell International
4/8/2004 AIG American
International
Group
-31.90% AT&T Corp.
PFE Pfizer -25.30% Eastman Kodak
VZ Verizon
Communications
-6.00% International Paper
Source: CNBC

History shows that new companies added to the blue-chip index generally outperform. Yet there have been a few notable exceptions that led to bear markets in certain stocks.

The last time the Dow added or removed three companies simultaneously was April 2004, when American International Group, Pfizer and Verizon joined the blue-chip club simultaneously. Proving that not every recent arrival to the Dow is an instant success story, by the following year two of those three names were down by more than 25 percent.

AIG led the declines, shedding nearly 32 percent; meanwhile, Pfizer dropped 25.3 percent, while Verizon slipped 6 percent.

Since 2004, the Dow has added nine new components--and six of them were down within a year, with an average loss of 27 percent. However, Travelers and Cisco both joined the index in June 2009, and gained more than 12 percent each in their first year.

The last component change to the Dow was UnitedHealth, which replaced Kraft Foods. Since joining the blue-chip index on September 2012, United has jumped by 36.9 percent.

—By CNBC's Javier E. David and Giovanny Moreano.

  Price   Change %Change
AA
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BAC
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HPQ
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GS
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NKE
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V
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DJIA
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AIG
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PFE
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VZ
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TRV
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CSCO
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UNH
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KRFT
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