My Top 30 Index: An Update

A year ago, I put together what I called "my own reinvention" of the Dow Jones industrial average, the popular 142-year-old large-cap index.

- JAMES K. GLASSMAN

I called it simply Top 30-"not a drastic change in the Dow but an updating." The portfolio combined the best of the Dow with some components of the Wired Index, concocted by the tech magazine in 1998, plus stocks drawn from my own annual Top 10 lists and a few others as well.

How did the Top 30 do over the past 12 months? Very well, thank you. My portfolio returned 26.5% for the year ending in April, compared with 13.3% for the Dow and 22.7% for the S&P 500, the large-company benchmark.

Top 30 is meant to be a long-term portfolio. As I say over and over, investors shouldn't hold stocks for just a year; you should buy shares with the intention of keeping them forever. But as companies change, don't be afraid to adjust your portfolioas I will reveal later in this piece.

But, first, let's take a look at why Top 30 outperformed the Dow by such a wide margin. A big reason was that 2023 was a great year for mega-cap technology companies, and the Dow lacks four that Top 30 embraces: Alphabet, the former Google, which returned 51.6% for the 12 months; Meta Platforms, the former Facebook, up 79.2%; Netflix, up 66.9%; and Nvidia, which rose 211.4%-by far the best performer in the portfolio. Together, these stocks represented more than one-third of the return of Top 30 as a whole.

The Dow added Top 30 component Amazon.com on February 24 of this year. (Was someone at S&P Dow Jones Indices reading my column?) The online retailing giant returned 66%, another boost for my portfolio.In addition, the Dow includes three other tech stocks that are part of Top 30: Apple, which had a miserable year, returning just 0.9%; Microsoft, which returned 27.6%; and Salesforce, the business software company, up 35.8%.