Dow record: irrational or rational exuberance?


Alan Greenspan quote from 1996: Irrational exuberance

Comment: Not sure if record is justified. Invest with care.

Update at close of market: Dow Hits Highest Close Ever
Dow Breaks Record, but Party Unlikely to Last

... history strongly suggests that a bull market with so much gray in its beard not only will take a rest but also should have a seat. So those who missed the most recent leg of the rally can find another entry point. "We now believe we are at the first of three market pivot points this year and suspect a drop is now likely to unfold over the next several months," Piper Jaffray's Craig W. Johnson and Leah Williams said in a market analysis. "We suspect this pullback in the broader market will be tactical in nature and may represent the single-best buying opportunity this year."


  1. WSJ: Dow Industrials Set Record

    The Dow Jones Industrial Average powered above its intraday record, riding a resilient 2013 advance and looking to put the devastating declines of the financial crisis in the rearview mirror.

    "It really does represent an achievement that we have climbed out of this crater," said Jack Ablin, chief investment officer at Chicago's BMO Private Bank, which manages $66 billion.

    Shortly after Tuesday's opening bell, the Dow industrials climbed past the 14164.53 closing peak hit on Oct. 9, 2007 and then broke through the intraday record of 14198.10, set Oct. 11, 2007, and continued rising above 14200.

    The average slid 54% over the 18 months that followed the 2007 record, bottoming at 6547.05 in March 2009. Since then, the blue chips have more than doubled. A close above the October 2007 high would be a record for the Dow average.

    "The national perception will be that we're past the lost decade if we go to new highs in the stock market," said Jim Paulsen, chief investment strategist at Wells Capital Management, which manages $332 billion. "The conversation has been: Are you being conservative enough in this high-risk investment world? And what it's changing to is: Are you being too conservative in this new bull market?"

    Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank, cited a rebounding economy, strong profits from U.S. companies and surging dividends as factors in pushing stocks to records. "There are a lot of great things going on," said Mr. Davidson, whose firm oversees $170 billion.

    Along with economic stabilization and the recovery in corporate profits, efforts by the Federal Reserve and other central banks to boost asset prices have also juiced stocks' rally.


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