Would optimism be higher if Apple were a Dow stock?

NEW YORK -- Right now, Apple mania is the feel-good story on Wall Street. But the "Apple Effect" would have been even greater had the keepers of the Dow Jones industrial average added the maker of the iPad and iPhone instead of Cisco Systems in June 2009 when it ousted then-struggling General Motors.

The reason? Had Apple, now the planet's most valuable company, been added to the iconic stock index on June 8, 2009, the Dow would now be trading at a record 14,810.80, or 16% above Wednesday's close, according to a calculation by Bespoke Investment Group.

But in reality, at 12,781 the Dow is 9.8% below its Oct. 9, 2007, record close of 14,164.53.

Apple's meteoric rise — including its first close above $500 a share earlier this week — has some wondering what might have been. "We wonder if investor sentiment would be more positive if the Dow was trading at record levels," says Paul Hickey of Bespoke.

The Dow is a price-weighted index, which means the higher the stock price the bigger its impact on the index's overall value. Apple has risen from $143 in June of 2009 to $497.67 now, so at its current price it would have carried great clout — both up and down. Wednesday's 97-point Dow drop would have been 167 points with Apple stock's $11.79 slide.

There is a line of thinking that during a period in which the mood of the investment community has been pessimistic, the psychology might have improved much sooner and created a positive feedback loop had the Dow been able to notch a record riding the coattails of Apple. Indeed, when it comes to an investor's psyche, new highs have a powerful effect on markets. They:

•Breed hope. "There's a psychological factor," Hickey says. "New highs make people more optimistic."

•Alter the national conversation. Fear has held back the recovery. A new Dow record might have changed the dialogue from fear to hope, says Jim Paulsen, strategist at Wells Capital Management.

•Reframe investors' mood.Main Street looks to the Dow for a read on the stability of the market, says Richard Moroney, editor of Dow Theory Forecasts, adding that a healthier Dow is likely to generate more interest in stocks.

Rich Silverman of Dow Jones Indexes says the Dow is "not an investment portfolio" and remains an accurate measure of the market.