It is backward-compatible, because they adjust the divisor to compensate, so that the index value pre-rebalancing is the same as the index value post-rebalancing.
If they never adjusted the list of stocks, it would eventually become irrelevant as stocks go bankrupt or are acquired. Only 1 current Dow member was in the index in 1907 (GE), and 4 current Dow members were in the index before 1939 (XOM, PG, DD).
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It is backward-compatible, because they adjust the divisor to compensate, so that the index value pre-rebalancing is the same as the index value post-rebalancing.
If they never adjusted the list of stocks, it would eventually become irrelevant as stocks go bankrupt or are acquired. Only 1 current Dow member was in the index in 1907 (GE), and 4 current Dow members were in the index before 1939 (XOM, PG, DD).