Mad Money

Destroying the Dow?

Cramer on Dow Changes

The Dow Jones Industrial Average switched out two stocks Monday to the total bafflement of Cramer, he told viewers during Mad Money.

Altria and Honeywell were dropped for Chevron and Bank of America , 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 – 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 or ConocoPhillips 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 ? Instead, biotechs like Pfizer , Merck and Johnson & Johnson take up valuable space, he said, even while their market share shrinks.

Then there’s the issue of both Verizon Communications and AT&T , the only real telcos in the U.S., being on the Dow. Cramer recommended switching out Verizon for Cisco Systems .

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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