What Now for the Dow

We rate all 30 stocks -- buy, sell or hold.

After representing the U.S. stock market for more than a century, the Dow Jones industrial average isn't going away. Perhaps it should. Despite the occasional injection of new blood (Cisco Systems and Travelers replaced General Motors and Citigroup, respectively, this year), the 30 Dow stocks still contain too many remnants from a bygone industrialized economy. In addition, its members are usually past their prime growth years (although they make up for it in size and financial strength). Worse, from a practical viewpoint, the 30-stock index uses an anachronistic, price-weighting scheme rather than weighting results by a firm's market value, as most modern indexes do (for more on the Dow's shortcomings, see Why the Dow Is a Dumb Index).

Still, its member companies are influential and widely held. Below is our take on each of them, including our traffic-signal-style ratings: green for buy, yellow for hold and red for sell. (Prices are as of August 7.)

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Contributing Editor, Kiplinger's Personal Finance