When Charles Dow launched his Dow Jones Industrial Average (DJIA) on May 26, 1896, few envisioned the 12 giants he picked wouldn’t be leading American industry a century later. But today only one of the companies shown below–General Electric (NYSE: GE)–is a current member of the Dow 30:

• American Cotton Oil Company
• American Sugar Company
• American Tobacco Company
• Chicago Gas Company
• Distilling & Cattle Feeding Company
• General Electric
• Laclede Gas Company
• National Lead Company
• North American Company
• Tennessee Coal, Iron and Railroad Company
• US Leather Company
• United States Rubber Company

Laclede Gas (NYSE: LG), a natural gas distributor serving the St. Louis area, still exists under its late 19th century name but was removed from the DJIA in 1899. Chicago Gas Company is still very much in operation, but only as a part of utility giant Integrys Energy Group (NYSE: TEG), which, like Laclede, isn’t even a member of the Dow Jones Utility Average.

American Cotton, American Sugar, Distilling & Cattle, Tennessee Coal and US Rubber were all eventually devoured by larger rivals. National Lead is now the relatively insignificant NL Industries, a one-trick pony with barely USD300 million in market capitalization. US Leather was dissolved in 1952.

Meanwhile, American Tobacco was broken up in a 1911 antitrust action, and the Securities and Exchange Commission broke up once mega-utility North American Company, then long past its prime. That was part of the “death sentence” established by the 1935 Public Utility Holding Company Act, which broke up the giant holding companies that dominated the power industry early in the 20th century.

That’s not an encouraging record. And unfortunately, it has stark implications for the 30 companies that now comprise the current Dow 30 list of dominant enterprises.

Because these are the kind of companies billion-dollar institutions load up on, it also has profound implications for investors who are depending on giant mutual funds to build wealth for retirement.

Changing Times

Why did the 19th century Dow fail? A quick glance at the industries represented in Charles Dow’s 1896 index is instructive. Eight of the 12 companies feature a particular agricultural or industrial commodity in their name, and for a very good reason: America was basically an agricultural and raw materials treasure house in those days.

The country’s industrial base was growing rapidly, particularly in the Northeast and Midwest. Two decades earlier, the states of the former Confederacy had succeeded in freeing themselves from military rule, part of the 1876 backroom deal that landed Republican Rutherford B. Hayes in the White House.

But with their economies based almost entirely on agriculture, they were still very much under the economic and political domination of captains of industry. Meanwhile, northern factories were benefiting from a growing wave of immigration from Europe.

The result was an economy based on cheap labor and cheap commodities. With labor rights non-existent, wages were abysmal. Corporate profits for industrial and natural resource powerhouses, meanwhile, were massive.

Ironically, even as Charles Dow was formulating his index, the times were already changing. Growing US manufacturers were rapidly becoming the country’s most important companies. Commodity producers were still very important, but now mainly as feeders for industries like steel, railroads and, later, automobiles.

Then came the advent of labor rights, made official by the election of Franklin D. Roosevelt to the White House in 1932. No longer could industrial companies keep workers in virtual servitude–paying them only enough money to buy products from the company store–as was particularly the case in the “mill towns” and coal mining towns in the South and Appalachia.

The manufacturing giants remained profitable. But with labor costs a great deal higher, they were a good deal less so. And as Labor Unions became progressively stronger in the 20th century, many began looking for places where labor and commodity costs would be lower. Some left the industrial North and Midwest for the American South, where even today “right to work” laws impede union organizing. Others left the country entirely.

These trends accelerated as the 20th century went on, steadily diminishing the power and profitability of the big industrials and the commodity-producing giants that had previously dominated the American economy.

The country itself, however, became steadily wealthier, thanks to the advent of entirely new industries tapped into the mega-trends that were reshaping the country.

The result is an October 2008 Dow 30 that looks very different from the one of 1896:

• 3M
• Alcoa
• American Express
• AT&T
• Bank of America
• Boeing
• Caterpillar
• Chevron Corp
• Cisco Systems
• Coca-Cola
• DuPont
• ExxonMobil
• General Electric
• Hewlett-Packard
• The Home Depot
• Intel
• IBM
• Johnson & Johnson
• JP Morgan Chase
• Kraft Foods
• McDonald’s
• Merck
• Microsoft
• Pfizer
• Procter & Gamble
• Travelers
• United Technologies Corp
• Verizon Communications
• Wal-Mart
• Walt Disney

The Dow of late 2008 still lists some pretty big industrial and commodity producer names. Super Oils Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM), for example, have risen to the top of the energy business over the past several decades, building vast empires of oil and gas reserves as well as essential assets to bring their products to market.

They and DuPont (NYSE: DD) are global leaders in the chemicals business, which continues to thrive as developing nations boost their productive capacity and living standards.

Alcoa (NYSE: AA) is still a leader in aluminum production. And Boeing (NYSE: BA), Caterpillar (NYSE: CAT), General Electric (NYSE: GE) and United Technologies (NYSE: UTX) are still major manufacturers.

All of these companies, however, have only stayed on top because they’ve been able to tack with the times. In other words, they’ve changed their ways of doing business to thrive in an economy that’s much different from the one of even 10 years ago. Their continued success will depend on being able to do that going forward.

Meanwhile, most of the rest of these companies are around mainly because of the vastly expanded wealth of the American consumer over the past hundred years. That’s a consequence of rising living standards and ever-more insatiable demand for creature comforts, amenities and entertainment.

They’ve tapped into the trend more successfully than anyone else to date and have reaped the rewards for their prescience and execution: membership in what’s still America’s most exclusive corporate club, the Dow Jones Industrial Average.

The very existence of a company like Walt Disney (NYSE: DIS)–devoted entirely to media and entertainment–would have been inconceivable a century ago. Now, it’s hard for parents of small children especially to imagine a world without it.

Ditto McDonald’s (NYSE: MCD), inventor and purveyor extraordinaire of the merger of fast food and entertainment.

More Americans now shop at Wal-Mart (NYSE: WMT) than anywhere else, a testament to the country’s insatiable need for low-cost consumer products.

Meanwhile, as the collective wealth of the nation has risen, so has the need for ever-more sophisticated and powerful US financial institutions. The likes of American Express (NYSE: AXP), Bank of America (NYSE: BAC), JPMorgan Chase (NYSE: JPM) and Travelers (NYSE: TRV) were shaken to their roots by the late-2008 financial crisis and credit freeze. But the fact that their near-demise nearly brought down the entire economy is a pretty clear demonstration of how critical they’ve become.

Health care is now one of the biggest industries in the US, as people are living longer and consuming more pharmaceuticals and medical services.

Finally, the explosion of connectivity in the latter half of the 20th century has continued into the 21st. That’s richly profited the owners of infrastructure like AT&T (NYSE: T) and Verizon Communications (NYSE: VZ) as well as leaders of technology like Cisco (NSDQ: CSCO), Hewlett-Packard (NYSE: HPQ), Intel (NSDQ: INTC), IBM (NYSE: IBM) and Microsoft (NSDQ: MSFT), which have prospered despite cut-throat competition from overseas.

The Next Iteration

The current Dow 30 is the best attempt of Dow Jones and its owners–now media mogul Rupert Murdoch–to highlight the leaders of the American economy at the present time. As history shows, American enterprise is in constant flux, with developing trends determining new winners and ultimately condemning other companies to extinction unless they tack successfully.

The 1896 launch of the official Dow Jones Industrial Average was itself preceded by four previous iterations, the first on July 3, 1884, of which none of the components made it to the 1896 group. And since the launch there have been changes resulting in 57 different groupings, including six before the 20th century began and seven since the 21st ushered in.

What’s in today won’t necessarily be in tomorrow. In fact, as history shows, the odds are distinctly against that. That’s bad news for those who are depending on Wall Street to pick their investments for them.

I always found it inconceivable how otherwise very intelligent people–many of whom are extremely successful in other walks of life–are all too willing to unquestioningly turn their financial well-being over to so-called experts rather than take the time to figure out their own investment style.

But that’s unfortunately what many Americans have elected to do by turning over all control of their investments to big mutual funds and other institutions, many of which are run by people with relatively little experience in the investment markets at all.

Worse, most institutions buy mainly stocks that are dominant now. Rather than seeking out the components of the emerging 21st century Dow Jones Industrial Average, they’re sticking with those of the 20th century, many of which are doomed to fall off the leader board, and probably a lot sooner than most think.

For example, in the DJIA’s latest iteration–launched June 8, 2009–two longtime titans were dropped, Citigroup (NYSE: C) and the now bankrupt General Motors (OTC: MTLQQ).

Before that, the September 22, 2008, grouping saw the deletion of another once-seemingly unassailable titan, now mostly US-government-owned American International Group (NYSE: AIG). Seven months prior to that, it was Altria (NYSE: MO), formerly Phillip Morris, and Honeywell (NYSE: HON) that got the axe.

Clearly there are no sacred cows on the DJIA, just as there aren’t in American industry. The key for investors, however, is that the same transcendent trend spelling one company’s demise is another’s staggering opportunity.

Focusing on those opportunities is why I put together the team of editors of New World 3.0. Basically, we’re looking for companies with the best chance to dominate the 21st century.

The 19 companies in our NW3 Portfolio may or may not ever be members of Rupert Murdoch’s Dow Jones Industrial Average. But they are all capitalizing on the trends that will inevitably reshape that index, almost certainly many times in coming decades. That means a whole lot of wealth building for those who buy them now.

As a brief glance at the table shows, we’ve already seen some terrific profits in these names. And we’ve taken profits from time to time in some that ran a long way in a big hurry, as they’ve taken a breather. But there’s still plenty of upside left for those who build positions now.

Our picks are divided into four groups. Beyond Our Borders and Red, White and Blue are major foreign and US-based companies, respectively, that dominated the 20th century and are now well-positioned to rule the 21st.

Unlike their rivals, they’re tacking to take advantage of the big trends. That doesn’t mean they’re not profiting in the near term, however. In fact they are. But the really big profits are still to come as they continue to build successful franchises in everything from connectivity and green energy to smart defense and health care.

And as they proved by weathering the worst recession and credit crunch in decades, all are substantial companies that can take the worst any market can dish out. In other words, they’re safe enough for even the most conservative investors.

Cutting Edge Tech, in contrast, is comprised of smaller, high-potential plays in companies that are mostly new to the scene. These have huge upside as their products and services will be increasingly in demand in coming years. That comes with risk, which we’re willing to take in pursuit of what are likely to be 10-baggers.

Just as the 19th and 20th century worlds needed raw materials, so will the 21st, no matter how “smart” we become in using them. In fact, as producers go ever further, ever deeper to find essential elements like iron ore for making steel, the larger and more powerful they need to become, and the more profitable the leaders will be. Metals and Materials includes our top picks in this group.

Our current picks have already given us considerable upside as Asian raw materials demand has picked up in the last few months. And we’ve already taken profits once in both. There will almost certainly be pullbacks, mainly when investors become fearful about the global economy.

But here too the upside has only begun to run. And again, both BHP Billiton (NYSE: BHP) and Vale (NYSE: VALE) have proven their ability to take some severe hits while remaining extremely profitable in the recent meltdown.

What kind of mix should you hold of our picks? The more conservative will want to stick mostly to the stocks in Beyond Our Borders and Red, White and Blue, while those with risk capital will want to mix in the others.

If you can’t buy everything, try to stay within the groups that best fit your risk tolerance. That’s the key to feeling comfortable, which is ultimately critical to sticking with these positions long enough to build real wealth.