Dow 20,000

WHAT IT IS

WHY IT MATTERS

It doesn’t… The 20,000-point milestone doesn’t really mean anything. It’s a big round number which makes it aesthetically pleasing and easy fodder for cable and print news, but there is no real significance behind the number. Even more, the Dow is, for all intents and purposes, an outdated benchmark largely ignored by investment professionals, and has been surpassed in significance by other benchmarks, specifically the S&P 500.

It does… Due to its age and longevity, the Dow is still the most widely known and followed index by your ‘Average Joe’ and it remains a large psychological and political flash point when discussing the economy. Even though it has been surpassed in technical accuracy and professional esteem by other benchmarks, it still does function as an adequate stand-in for the U.S. stock market, and thus the economy as a whole.

  • THE BULLS – “The party is just getting started”

    • Fundamentals are strong: Many investment professionals believe the economy and stock prices are supported by strong fundamentals and prospects for future growth, and even predict hitting 30,000 in the near future
  • THE BEARS – “What goes up, must come down”

     

WHERE WE ARE NOW

  • The market has continued to climb higher but opinions are split on whether this will continue or if we are due for a correction as a result of either climbing too high too fast or some crisis within the administration

THINGS TO THINK ABOUT

  • How much longer can this bull market run, and is the “Trump Rally” a “Trump Bubble?”
  • Will the market experience a large and sudden pullback if President Trump fails to deliver on slashing regulations, cutting taxes, and / or spending big on infrastructure?
  • Given that Trump has taken credit for the market rally, will the current perceived chaos surrounding his administration continue and eventually reverse investors’ enthusiasm?
  • Is the Dow and other indices an accurate representation of the health of the country’s economy or is it a distraction?