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The Dow Jones Industrial Average switched out two stocks Monday to the total bafflement of Cramer, he told viewers during Mad Money.
Altria [MO
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] and Honeywell [HON
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] were dropped for Chevron [CVX
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] and Bank of America [BAC
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], leaving Cramer to wonder how these new components help the Dow represent the market as a whole. After all, isn’t that the point?
Cramer sees a few important market themes that the Dow decision-makers apparently overlooked: the rising importance of natural resources, both oil and the exporters of these resources, and the decline of the financial sector.
Imagine his dismay then, when a strong international business like Honeywell got the boot, and Bank of America got the nod. If anything, Cramer said, the drop of financials to 15% from 20% of the market should have made clear the need to pull a stock from this sector – not add one. He would have cut American International Group [AIG
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] – run by the “Chuck Prince of insurance,” CEO Martin Sullivan, Cramer said, and new member of Mad Money’s Hall of Shame.
And Chevron? Schlumberger [SLB
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] or ConocoPhillips [COP
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] would have been better choices, and the same goes for Freeport-McMoran, America’s great miner.
No one seemed to think agriculture – one of Cramer’s favorite bull markets – needed recognition. Why not add a Deere or Monsanto [MON
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]? Instead, biotechs like Pfizer [PFE
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], Merck [MRK
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] and Johnson & Johnson [JNJ
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] take up valuable space, he said, even while their market share shrinks.
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Then there’s the issue of both Verizon Communications [VZ
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] and AT&T [T
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], the only real telcos in the U.S., being on the Dow. Cramer recommended switching out Verizon for Cisco Systems [CSCO
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].
The bottom line: If the Dow is supposed to be representative of the market, then the least the decision-makers at the company could do is add stocks that actually represent the market, Cramer said.
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