John Paglia Quoted in Opinion on the Dow Jones Index in Bloomberg
Shares of Amazon.com Inc. surged briefly last week after the company announced a stock split, a jump that defied logic to many outside observers. For practical purposes, stock splits are cosmetic and mostly immaterial: In a 20-to-1 split such as Amazon’s, each original share receives 20 new shares worth 1/20th as much. So why did the stock pop, and what does it say about this market? An opinion piece written by Bloomberg writer Jonathan Levin offered a critical look at the origins of the Dow and how the index is actually convolution masquerading as simplicity. Pepperdine Graziadio Business School faculty member John Paglia is quoted in the opinion: “In today’s day and age, I’m not sure that simplicity is really a net advantage if individuals think they’re investing in the broad market” but actually aren’t. The article questions hanging on to an old and obviously suboptimal practice solely out of a sense of tradition and because, well, it’s not clearly harming anyone too much. The article concludes it’s time to retire the Dow’s price weighting once and for all.
The full article is available on Bloomberg.