The DOW at 20,000

Dow ends at 20,000—marks 2nd-fastest run to a milestone run in history

Excerpt:

The Dow Jones Industrial Average on Wednesday closed above the psychologically significant threshold of 20,000. Finishing at the level represents a milestone for the blue-chip gauge and highlights a relatively speedy path higher for the stock market in the wake of Donald Trump’s election win in November. The Dow DJIA, is up about 9.5% since Trump’s Nov. 8 election victory, the S&P 500 index SPX, has gained nearly 7%, while the Nasdaq Composite Index COMP, has advanced roughly 9% during that period.

Comment:

• What do I think? Investors like Trump! The run-up from 19,000 to 20,000 is the Trump effect
• Will it go higher? I don't know. Generally stock prices go up as the underlying earnings go up. I'm skeptical of emotional buying. 
• On previous milestones. See this Wiki list and the chart below.
• When I was in college, the DOW had not breached 1,000 (I graduated in '71)
• Kathee and I started investing (in 401Ks) in '93 and '94

- Dow tops 20,000
- Asia stocks extend rally
- Yen fluctuates
- Oil back above $53https://t.co/gbqFXqR5Se pic.twitter.com/RhKWFRfagp

— Bloomberg (@business) January 26, 2017

Update: Here's a comparison of Dow 10,000 and Dow 20,000

Historically, the stock market tends to gain about 7% annually, inclusive of dividend reinvestment. This means the major stock indexes tend to double in value about once every decade, and that the natural trend of high-quality stocks over the long-term is to head higher. Of course, sometimes it takes longer than others for major indexes to hit arbitrary milestones. It took the Dow only three years and five months to head from 5,000 to 10,000. However, it took more than 17 years for the Dow to move from 10,000 to 20,000. Once again, these are arbitrary figures I'm using for illustrative purposes only, but if you'd have bought stocks at regular intervals over the past 17-plus years, chances are that your average buy in would have you up in excess of the 100% return in the Dow between March 29, 1999, and Jan. 25, 2017. Focusing too much on the Dow Jones's achievement also overlooks the inherent flaw of the Dow: its focus on price instead of market cap weighting.

DOW Milestones

HT Marketwatch.  Click image for larger

The DOW at 19,000

Dow closes above 19,000 for first time in its 120-year history

Excerpt:

Get out the Dow 19,000 rally caps. The Dow Jones industrial average, arguably the world's best-known stock market gauge, closed above the 19,000 barrier Tuesday for the first time in its 120-year history.

For the second straight day, all four major U.S. stock indexes touched new record high territory. The Dow jumped 67.18 points, or 0.4%, to close at a record high of 19,023.87, according to preliminary calculations. T

he Standard & Poor's 500 index closed above 2200 for the first time ever as it rose 4.76 points, or 0.2%, to 2202.94.

The Nasdaq composite rose 0.3%, to an all-time closing high of 5386.35 and the Russell 2000 gained 0.9% to 1334.27, its thirteenth straight session of gains.

The assault on Dow 19,000 has taken nearly two years, or 700 calendar days, since it took out the 18,000 barrier back on Dec. 23, 2014. It was the slowest climb from one 1,000-point milestone to the next since taking nearly six years to climb from 14,000 in July 2007 to 15,000 in May 2013. (That long drought, of course, coincided with the Great Recession and the worst stock market decline since the Great Depression.)

Comment: Way back when I was working on my BBA at the University of Cincinnati, the DOW had not yet breached 1,000 (milestone reached November 14, 1972). I graduated in June 1971. More: Dow 19000! But 1,000 Points Ain’t What It Used to Be

Sure, the Dow Jones Industrial Average just closed above 19000 for the first time. But it did it by rising just 5.6% over about the past two years, ever since it first pierced 18000 in December 2014. That means it took almost 500 trading days to achieve the latest 1000-point milestone, the seventh-longest stretch of time between such round-number marks. The 16000, 17000 and 18000 Dow record were all shattered in fewer than 160 trading sessions after the previous 1,000-point level was first reached. And simple math shows that each 1,000-point rise is less impressive than the last. The march from 17000 to 18000 was good for a 5.9% gain, for example, while the climb from 10000 to 11000 equated to a 10% rise. Put the two measures together, and the latest 1,000-point climb was the result of average gains of about 0.01% each trading day. The last three round-number records were set after average moves of more than 0.04% each day.

Here’s when we’ll see Dow 20,000, according to one chart expert https://t.co/VhCAjzJvW5 via @tradingnation

— CNBC (@CNBC) November 23, 2016

Despite all the hoopla, the S&P 500 has achieved only a “very minor break to new highs.”

Here's why: https://t.co/FzWBqyI1oM pic.twitter.com/MKKXCxHPaI

— MarketWatch (@MarketWatch) November 26, 2016

The trailing 12-month P/E ratio for $SPX is 20.1. https://t.co/u361qpGrkV pic.twitter.com/ARplaY65Uv

— FactSet (@FactSet) November 26, 2016

Dow's wild ride

See: Investing in a twitchy market

Advice:

... do not be overly euphoric on market upswings or overly morose on downswings

Visual History Of The Dow - 2002 to 2012

Visual History Of The Dow Jones Industrial Average (DIA)

Comments: Article has visual history from '99 to '12. Interesting. I've tried to cherry pick the current DOW for investing. My four don't have (have not invested in) from the current DJIA: HPQ, BAC, VZ, and DIS. 

On the why-nots:

• Hewlett-Packard Company (HPQ). I think the company is broken. Buy Palm ... dump Palm OS, Introduce a tablet ... drop it ... divest printer business ... never mind.
• Bank of America Corporation (BAC). Invest in WFC or JPM instead. Article comparing Wells to Bank of America.
• The Walt Disney Company (DIS): I don't like the business.
• Verizon Communications Inc. (VZ): High P/E multiple & insufficient earnings to pay current dividends. Better telecoms out there to invest in.

I remember the DOW before it reached 1000

WSJ Dow Milestones

Historical components of the Dow Jones Industrial Average
Back when I was in college (1967-1971), I was in a class (economics? investing? finance?) where the professor wondered when the DOW would breach 1,000.

Dow record: irrational or rational exuberance?

x

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."

DOW: Back to 11,000

Dow closes above 11,000 for first time since ’08

Excerpt:

The Dow Jones industrial average has closed above 11,000 for the first time in a year and a half on investors' rising hopes about the economy.

The Dow edged up about 9 points Monday to almost 11,006. The Standard & Poor's 500 index came within a point of hitting its own milestone of 1,200 during trading but closed just short of that mark.

Comment: My take is that there is some irrational exuberance in the investment community!

Wall Street Journal graphic

DJIA: GM, C OUT .... Cisco and Travelers IN

Dow kicks out GM and Citigroup

Excerpt:

According to a statement released Monday, General Motors, which filed for bankruptcy on Monday, will be replaced by Cisco Systems (CSCO, Fortune 500); Citigroup (C, Fortune 500) will be replaced by The Travelers Companies (TRV, Fortune 500).

The changes in the Dow will go into effect on on June 8, according to Dow Jones.

Comment: They were dead weight to the DOW!

Time to update the DJIA

CITI, GM COULD FACE DOW DELISTING

Excerpt:

John Prestbo, editor and executive director of the DJ Indexes, which selects the 30 stocks in the Dow Jones industrial average, said he tracks both companies "every day to see what the status is."

Should either stock be removed, "everything is on the table basically in terms of replacements," Prestbo said.

Comment: Current components here. WFC should replace C and F(ord) should replace GM!

Drop GM and C from DJIA

Kick GM out of the Dow...now!

Excerpt:

General Motors has a market capitalization of less than $2 billion. The stock, which now trades for a little under $3 a share, hit a 70-year low of $1.70 on Thursday morning before recovering a bit.

Normally, when a blue-chip company sinks to such depths of despair, it gets tossed from the S&P 500. But not only is GM (GM, Fortune 500) still a member of that index, it remains a component of the granddaddy of market barometers: the venerable Dow Jones Industrial average.

Why? Or in the words of mid-'90s self-help guru Susan Powter, "Stop the insanity!" The editors of The Wall Street Journal and Dow Jones Indexes, who decide who's in and who's out of the Dow, soon have to come to grips with reality and remove GM from the DJIA.

Comment: WFC should replace C. DJIA components