Citigroup stock: Being dropped by Dow index isn't the problem

— -- A: Although it only represents 30 stocks, the Dow Jones industrial average remains one of the most popular ways for investors to keep an eye on the U.S. stock market.

Over recent history, components of the Dow have remained fairly constant, compared with some other stock indexes. Still, there are changes from time to time, as you can see if you click on the links below.

On its surface, you might think having a stock like Citigroup removed from the Dow would be horrible news, because being a component of the Dow gives a stock some blue-chip stature.

But you don't want to worry too much about the effect of Citigroup's removal on the stock. Citigroup is still part of the Standard & Poor's 500 index. That's significant because there's more money directly invested in the companies in the S&P 500 than in the Dow 30.

Vanguard's top market index fund, for instance, owns the stocks in the S&P 500. Being removed from the S&P 500 would mean billions of dollars invested in the stock by index funds would come out. But that's not happening.

That said, stocks are dropped from the Dow for a reason.