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Dow Jones and Company said Monday that it would be adding two new companies to its industrial average. The two companies are Travelers and Cisco Systems. Of course, when two go in the average, two have to come out.

Given the news that has happened with GM over the past few months, it is a no brainier that GM would be cut from the average. However, Citigroup was also given the boot.

Travelers was once a subsidiary of Citigroup and will help maintain the representation of financial companies in the average.

Citigroup has had a fairly rough year with subprime lending, the credit crisis, and eventually the recession taking huge cuts from Citigroup. Citigroup is the second financial company to be dropped from the average during this recession, the first being AIG. AIG was taken off the average in September after the government took an 80% stake in the company and lent it several billion dollars in bailout money.

The Dow industrial average includes 30 stocks. These stocks are a measure of the market and what the public usually looks at to measure the health of the markets as well as the economy. It is currently made up of (on top of Travelers and Cisco) 3M (MMM), Alcoa (AA), American Express (AXP), At&t (T), Bank of America (BAC), Boeing (BA), Caterpillar (CAT), Chevron Corporation (CVX), Coca-Cola (KO), DuPont (DD), ExxonMobil (XOM), General Electric (GE), Hewlett-Packard (HPO), The Home Depot (HD), Intel (INTC), IBM (IBM), Johnson & Johnson (JNJ), JPMorgan Chase (JPM), Kraft foods (KFT), McDonalds (MCD), Merk (MRK), Microsoft (MSFT), Pfizer (PFE), Procter & Gamble (PG), United Technologies Corporation (UTX), Verizon Communications (VZ), Wal-Mart (WMT), and Walt Disney (DIS).

The changes will go into effect next Monday.

Citi has been on the Dow industrial average for 12 years, when it was listed as Citicorp. It became Citigroup in 1998 when Travelers Group merged with Citicorp. In 2002, Travelers was spun off again and has been a separate company ever since. So, it is a bit strange that the parent company has fallen off the average and has been out performed by its subsidiary.

In reality, Travelers is taking AIG’s previously held spot in the average. The core product of both companies is the same; casualty insurance sales.

GM has to get its act together to even be considered before it is listed on the average again. It will likely be years for the once strong auto company to see the tops of any list. However, I do believe that bankruptcy was a step in the right direction. If it were left up to its own devices, GM would have been run into the ground a year ago, if the government wouldn’t have stepped in. Worse, if they didn’t file for bankruptcy and couldn’t restructure, the government would have lost all of our money in the GM “gamble” and would be throwing money into a bottomless pit.

Jeremy

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