Bulls & Bears: A Look at the Dow Jones Beyond 20,000
Unless you've been living under a rock, you know that this week the Dow Jones Industrial Average (we talked about it earlier this week on Macro Mondays) crossed the $20,000 mark for the first time ever. It's quite incredible and worth mentioning since it took the Dow almost 103 years to reach just 10,000 in 1999 and another 17 years for it to double that amount.
More interesting than ALL of this is the fact that the last 1,000 of those points to reach the 20,000-milestone took an incredibly short amount of time -- a mere 42 days. Clearly the biggest change during all of this time is Trump becoming president, and ultimately the blue-chip heavy Dow Jones gained value thanks to his moves to promote infrastructure projects (um...like the Mexican-border wall) and cutting regulations.
Since Election Day 2016, the U.S. stock market has gain a record $2.0 trillion in wealth -- for reference, that's over 10% of the US annual gross domestic product in just 46 days.
All of this is very exciting, but very disturbing.
Optimism is great, but not having enough substance to back up that optimism is rather worrisome, at least in the near-term. The nice thing is that after several attempts, the Dow finally established a new ceiling and floor for its prices, and it subsequently this will lift the overall averages and price targets going forward.
At the same time, it is not a time to shy away from investing in the market. Your retirement funds will be heavily fueled in the near-term, while Social Security may slowly be phased out over time. You never know. Anything can happen in this new economy apparently.
Everyone should be smart and vigilant about their money and always invest in companies with smart management teams and engage in business activities that you like and understand.