If whoever is in charge of the Dow Jones Industrial Average can drop components at will simply because they seem no longer to conform to the character of modern industry, certainly the INC. Index is entitled to do the same. And that's what happened this month, the time for INC.'s annual reshuffling to conform with the current list of 100 fast growers (see "From Riches to Rags . . . and Back," May). Indeed, last year's entire batch (with the exception of a handful of repeaters) has been given the heave-ho and replaced with a younger flock. The percentage gain or loss of the new gang (into each of which $100 was "invested" at the end of February 1986) was then tacked on at the point where the old group retired.

Trouble is, unlike the recently reorganized Dow, the new INC. Index did nothing, as can be seen on the adjoining chart. A major reason for INC.'s sideways movement in the face of robust demand for stocks in the other averages is that INC. doesn't pick 'em the way Messrs. Dow and Jones do; if we did, we'd opt for the likes of Apple Computer, Microsoft, Reebok International, Autodesk, Worlds of Wonder, and 95 similarly highflying issues -- some of which are ex-100 companies that have gone on to large profits and stock-market success but couldn't keep to the breathless sales-growth pace. INC. is hamstrung by revenue-growth statistics that dispassionately dictate which companies are included in its stock index. As has often been mentioned here, revenue growth does not necessarily translate to earnings growth and thence to stock appreciation -- at least at this stage of the game.

What it would take to stir 1987's 85 new listees (15 stocks have been screened from the INC. Index due either to their exceptionally low prices or inactive trading volume) would be a speculative fling fired by cash-rich investors wildly seeking untested receptacles in which to seed their money. If continued aftermarket strength in initial public offerings -- set back only by January's apparent issue-pricing excesses -- is any indication, significant gains may yet occur among the formative companies represented by the INC. Index. Unfortunately, such a speculative binge often caps the end of a bull market -- but at least let's see it happen, and we'll take our chances.