The thing about Dow milestones

Thirty years ago today, the Dow Jones Industrial Average hit 2,000 for the first time ever. This reminder is particularly apropos as the DJIA has currently spent the last 20 days or so oscillating just below 20,000, coming within one (one!) point on Friday afternoon.

Here’s a bit of fun from a 1996 Wall Street Journal piece about what was being said back in 1987 as stocks began the year at 1895, ran through 2000 and then touched 2722 by August…

When the Dow industrials surpassed the 2000 mark, almost no one foresaw the pyrotechnics to come. The prevailing feeling was that, having climbed to 2000, the average would need to rest for a while.

Alfred Goldman of A.G. Edwards & Sons in St. Louis predicted “a victory celebration and then a headache.” New York money manager Robert Stovall predicted a “groundhog day” effect in which the market would “see its shadow, and promptly duck down again.” Mary Farrell of PaineWebber predicted a trading-range market hovering between 1800 and 2200.

Nor did many people guess at the time that three additional millenary milestones would fall within nine years. After all, it had taken the industrial average nearly 77 years to reach 1000, in 1973. Then it took nearly 14 years for the average to climb to 2000.

Of course, it’s easier and easier to hit each 1,000-point milestone, because each point gain becomes smaller on a percentage basis as the index rises.

Little did the commentators of the day realize that the massive rally in the first half of the year would eventually lead to the October crash that has lived on in infamy ever since. And little did the survivors of that 23% crash realize that the market would finish 1987 with a gain despite it!

And of course, they could never have known that within a decade or so, Dow 10,000 would be in sight, followed swiftly after by 11,0000 – and then a return trip back to the 6,000’s just a few years later.

The thing about major milestones for the Dow Jones Industrial Average – whether we’re talking about 2,000 or 20,000, is that they contain precisely zero useful information about what the future may hold. They’re fun to talk about and to celebrate, but they work terribly as buying or selling indicators.

Source:

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Bitcoin Loophole Review commented on Sep 22

    … [Trackback]

    […] Find More on to that Topic: thereformedbroker.com/2017/01/08/the-thing-about-dow-milestones/ […]

  2. como trabaja bitcoin commented on Sep 30

    … [Trackback]

    […] Here you will find 75591 more Info to that Topic: thereformedbroker.com/2017/01/08/the-thing-about-dow-milestones/ […]

  3. immediate edge commented on Oct 01

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2017/01/08/the-thing-about-dow-milestones/ […]

  4. bitcoineraonline.com commented on Oct 03

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2017/01/08/the-thing-about-dow-milestones/ […]

  5. td easy web commented on Dec 04

    … [Trackback]

    […] Read More on that Topic: thereformedbroker.com/2017/01/08/the-thing-about-dow-milestones/ […]

  6. fausse rolex commented on Jan 16

    … [Trackback]

    […] There you can find 27286 more Information on that Topic: thereformedbroker.com/2017/01/08/the-thing-about-dow-milestones/ […]