DJIA Rejects Significantly Outperform in 2010 (DIA, GM, C, TRV, CSCO, KFT, AIG, CVX, BAC, MO, HON)

There has been an amazing feat in 2010.  All of the most recent companies which have been booted out of the Dow Jones Industrial Average have outperformed their replacement stocks and the broad market in 2010.  On a dividend adjusted basis using the DIAMONDS Trust (NYSE: DIA), the DIAMONDS closed 2009 at $101.83 and closed at $115.54 on Monday.  That garners a year-to-date gain of 13.46%.  We took a look at General Motors (NYSE: GM) and Citigroup Inc. (NYSE: C) versus The Travelers Companies (NYSE: TRV) and Cisco Systems Inc. (NASDAQ: CSCO). We also paired up Kraft Foods Inc. (NYSE: KFT) against American International Group Inc. (NYSE: AIG), and finally Chevron Corporation (NYSE: CVX) and Bank of America Corporation (NYSE: BAC) against Altria Group Inc. (NYSE: MO) and Honeywell International Inc. (NYSE: HON).  The results speak for themselves.

On June 8, 2009, General Motors and Citigroup Inc. (NYSE: C) were replaced by The Travelers Companies (NYSE: TRV) and Cisco Systems Inc. (NASDAQ: CSCO). Citigroup was $3.31 at the end of 2009, and shares closed Monday at $4.77 for a year-to-date gain of 44%. General Motors Corporation (NYSE: GM) of today is not possible as a reference because the real GM went bankrupt and the now-public GM is what was left over for GM creditors.  Cisco shares closed 2009 out at $23.94, giving its $20.16 price a drop of more than 15% for 2010; Travelers’ dividend adjusted price of $48.51 to close out 2009 versus a Monday close of $55.79 gave a gain of 15% year-to-date.

On September 22, 2008, Kraft Foods Inc. (NYSE: KFT) replaced the American International Group Inc. (NYSE: AIG) in the DJIA 30.  AIG closed 2009 at $29.98 against a Monday close of $59.38, representing a whopping 98% gain year-to-date.  Kraft has had a good year with a 2009-end close of $26.41 and a Monday close of $31.61 giving a 19.6% gain year-to-date.  Still, the comparison is hard to even compare.

On February 19, 2008, Chevron Corporation (NYSE: CVX) and Bank of America Corporation (NYSE: BAC) replaced Altria Group Inc. (NYSE: MO) and Honeywell International Inc. (NYSE: HON).  On a dividend adjusted basis, Altria closed out 2009 at $18.38 and shares closed Monday at $24.70 for a gain of 34.3%; Honeywell closed out 2009 at $38.12 on a dividend adjusted basis and shares closed Monday at $53.39 for a gain of 40.5%.  Chevron closed at $90.12 Monday against a dividend adjusted 2009-end of $74.22, for a 21.54% year-to-date gain. Bank of America closed out 2009 at $15.02 and shares are in the red for 2010 as the stock closed Monday at $13.27.

Maybe the DJIA should consider keeping things more static.  We recently covered 5 Stocks Which Should Leave the DJIA, and their five potential replacements.  The DJIA changes are usually done one or two at a time, so don’t look for any major reshuffling of that sort any time soon.  Some of the relative gains are of course due to such low price drops from highs, but the math is speaking for itself today.

If AIG is the former DJIA component of the year, perhaps Bruce Berkowitz deserves manager of the year considering that he has been increasing his AIG stake all along the way.

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JON C. OGG