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How Now Apple For The Dow?

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With the General Motorsfiling for bankruptcy today, that left a vacancy in one of the most exclusive and prestigious clubs in all of finance. And I would have made the case that Apple Inc. ought to fill GM's slot on the Dow Jones Industrial Average.

The Cisco Systemschoice is a good one, but hardly a bold one. Still, when you add Cisco to HPandIntel, and to a lesser extent Microsoft, Silicon Valley is represented rather nicely on the average. Apple, however, would have been a better choice.

The Dow has been around for well over a hundred years, and it is by far the most quoted and closely followed economic barometer out there. That's not to say it's the best indicator. Some will say the S&P is a broader measure of Wall Street's health, but the Dow is still the grand-daddy of them all. Through the years, members have dropped in and out, and the folks behind its list of stocks made major headlines years ago when they added NASDAQ issues Microsoft and Intel to the list.

And Cisco follows that NASDAQ carpet-bagging tradition, and in this new economy, an IT economy, an economy for the 21st Century that eschews the conventional manufacturing and traditional financial bedrock of the last couple of centuries, homage in fact ought to be paid to the revolutionary and financially solid pioneers.

Cisco certainly fits the bill, but Apple would have been a better fit.

Apple could have addressed several key issues for the Dow folks: most notably, there's momentum, and track record, and profits, and vision, and excitement behind this company. The truth is that the Dow folks want their index to go up, and there's probably no better company out there that will make that happen. Cisco shares to say the least have traded in a decidedly more narrow range than Apple's.

Some might argue that the Dow already has enough tech, and specifically enough PC and tech hardware since HP is also a member of the club.

But that's where Apple offers truly a different option than the other tech companies already on board, thanks to its compelling diversification. To say Apple is merely another hardware maker, or just a gadget company, or simply another consumer electronics company, misses the point of why this company is truly extraordinary: its vertically integrated Macs, iPods, iPhones, iTunes and App Store is a remarkable economic and creative model the likes of which investors -- and the tech community -- have never seen before. It's been around 30 years, so it has the longevity chops so necessary among conservative investors who tend to turn up their noses at flashes in the pan, or newcomers that may not have the moxy to last much longer. Let's not forget that $30 billion in cash in the bank either -- slightly less than Cisco's enormous war chest, or that the company owns the digital media revolution -- which is really only just beginning -- and is making enormous inroads in smart phones, which might still be the single most exciting sub-sector in all of tech.

If the membership team behind the Dow issues wanted to strike a bold move, they could've given Apple the nod to replace GM: what a message it would have sent. The car companies had their century. This one belongs to tech. And Apple, thanks to consistent innovation, might indeed be tech's biggest opportunity, and even after 30 years, is still Wall Street's most intriguing rising star.

Cisco is nice, and indeed vital to the tech economy as a key bellwether, as Dow Jones editors said today in making their choice, and my congratulations goes to Cisco and its shareholders. But Apple would have been better. Far better.

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VOW3
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CSCO
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GM
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HPQ
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INTC
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MSFT
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