Apple Inc. (AAPL): Profiting From the Upcoming Inclusion in DJIA

Apple Inc. (NASDAQ:AAPL)’s coronation next year should very much be on the cards if Dow Jones wants to remain relevant in the new era of mobile. In an article on MarketWatch, Jennifer Booton, discussed what is to be expected from the tech giant in terms of movement in the stock price, when the grand event is announced.

Although the findings are based on past performance of stocks after their addition in Dow Jones industrial average, and as any disclaimer from a hedge fund will tell you, past performance is not a guarantee of similar results in future, but the frequency of such an event might help in bringing down this uncertainty.

In a nutshell, Apple Inc. (NASDAQ:AAPL) is set to rise steadily on the announcement of the stock’s addition to the blue chip world, but then a prolonged fall to the other side is to be expected just as soon as the party ends and the hangover, or in other words mean reversion, starts to kick in.

Booton’s prognosis of Apple Inc. (NASDAQ:AAPL)’s fate is based on research done by Jason Goepfert, who is president of Sundial Capital Research. Goepfert analysed companies 20 days before and after their addition in Dow. Apple Inc. (NASDAQ:AAPL)’s inclusion like most other companies will be announced almost three weeks before the coronation takes place, hence a 20 year period is an appropriate time frame for such analysis.

The inclusion of Apple is going to be a milestone for the index, which still remains bereft of technological companies which are making great headways recently. This group includes names like Facebook Inc (NASDAQ:FB), Google Inc (NASDAQ:GOOGL) and even the e-commerce player, Amazon.com, Inc. (NASDAQ:AMZN), according to Booton.

Apple Inc. (NASDAQ:AAPL) is expected to lead the group not just based on consistent performance, and the fact that it is the largest company in the world based on market capitalization, but also because of the stock split earlier this year which makes the stock price compatible with the requirements of being a Dow member.

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