Monday, December 19, 2016

Chart Talk {Dow 20,000}

There's been a lot of discussion recently in the financial press on the Dow Jones Industrial Average breaching the 20,000 level.  These sort of thresholds don't mean a lot to folks in the investment business and the Dow is not the average many money managers pay attention to.  There are too few stocks in it to be representative of the overall market.  Still, individuals know this index the best, it's the one featured in the papers as representative of the stock market and whenever there's a lot of volatility in the markets {up big or down big}, it's the Dow that seems to get featured on TV or radio. So in that sense it's still important  Anyway  "Chart of the Day's recently took a look at the index as it approaches this level.    Here's their chart and commentary below:

"With the Dow quickly approaching the 20,000 milestone, today's chart provides some long-term perspective by illustrating the inflation-adjusted Dow since 1900 -- there are several points of interest. Take for example an unlucky buy-and-hold investor that invested in the Dow right at the dot-com peak of December 1999. A decade and a half later, the inflation-adjusted Dow is up a mere 20%. That is not altogether an impressive performance considering that 17 years have passed. On the other hand, take the investor who bought right at the end of the financial crisis. The inflation-adjusted Dow is up a significant 146% from its financial crisis lows -- not bad for a for a seven and a half year investment. More recently, the inflation-adjusted Dow has rallied and continues to make new all-time highs as it approaches a major 20,000 milestone."

*Long ETFs related to the Dow Jones industrial Average in certain legacy accounts.