Long-time readers of this blog know that I am always interested when the owners of the Dow Jones Industrial Average (DJIA) announce a change to one or more of the index’s 30 components (do a search for “Dow” on this site to see past articles). Usually it is a very good lesson in sentiment-based investing and happens at a time that will only hurt the index’s future performance (take out the losers and replace them with high-flyers). The latest change announced late last week might take the cake though. Intel (INTC) is out after 25 years and is being replaced by Nvidia (NVDA).

Intel was added to the Dow on November 1, 1999, just months before the tech bubble peaked in March 2000, which is yet another data point supporting the idea that Dow changes can serve as strong contrarian indicators (changes to large indices are mostly based on market cap, whereas since the Dow only has 30 companies, it’s basically a handful of people making a discretionary call on their own).

So where was Intel trading when it was added in late 1999 versus where it is today? On a split-adjusted basis INTC shares closed at $21.99 each the day before being added to the Dow. Now 25 years later, INTC closed at $21.52 just before the change was announced. Sure, there were some dividend payments made to shareholders along the way, but that just means the stock has compounded at barely above zero precent a year for nearly three decades since being added to the Dow.

As if there weren’t enough buyer beware signals for NVIDIA stock already (e.g. massive stock sales by the CEO constantly), this is yet another sign of extreme public sentiment. Much of it may very well be deserved… the question is simply whether all of it is.