( from barronsonline) Microsoft's imminent 2-for-1 stock split do to take effect Feb. 18, will have a secondary and real effect on the Dow Jones Industrial Average: Essentially, it will make the world's most valuable company a fairly insignificant force in influencing the Dow, which is price-weighted. That means that higher-priced shares count for more than lower-priced ones, no matter the companies' market value. Other indexes of note are weighted by market capitalization. The price weighting of the Dow has always made it quirky and somewhat capricious in its motivations. But the Microsoft split will exacerbate the particularly skewed current weightings of the Dow Industrials, in which a couple of high-priced stocks such as 3M and Procter & Gamble dwarf several of the largest companies' stocks. (A one-time adjustment at the time of the split will mean the actual 2-for-1 distribution won't impact the index. But Microsoft's lower price from that point on will make its equivalent percentage moves less important than the moves of higher-priced shares.) In fact, 3M counts for more in the index than General Electric, Citigroup, Exxon Mobil and Microsoft will after the latter's share split. This is a stark distortion considering that those four heavies have a combined market value of more than $900 billion, compared with $50 billion for 3M. With 3M around 128 and P&G around 85 being the two most highly priced stocks in this index, they represent more than one-sixth of the Dow. These are also two of the most defensive stocks in the index, meaning they tend to perform relatively well when the overall market is suffering. This has dampened the downside in the Dow compared with the S&P 500. Add in the fact that the four tech stocks in the Dow make up about 11%-12% of the index versus about an 18% tech weighting in the S&P, and the Dow's defensive characteristics become more obvious. This helps explain why the Dow was down less than 15% in the 12 months through Thursday, while the S&P 500 was off more than 21%.