Dow Reaches 19,999.99
Actually, it went even further. On Wednesday, January 26, 2017, the Dow Jones Industrial Average crossed the psychological threshold of 20,000 to close at a new record high of 20,068.51. But for you, none of these numbers are any more significant than the others! While it is good to read headlines about things like rising indices and positive consumer sentiment, equity growth is completely expected.
Dow 20,000 is just a number that makes for a catchy headline—it is not a reason to act, or even a proxy for your portfolio performance. The underlying reason to invest in equities does not change based on the price of the Dow, whether it’s 10,000 or 19,999 or 20,000. When you invest in an stock index fund or any other form of equity exposure, your reason is likely long-term capital growth. While it is a good thing for the value to increase, new highs in the indexes are not as rare as they are often made out to be. In 2016, the Dow reached new all-time highs 9 times! Of course this is positive for investors, but it is not anything unusual. We invest in equities because we hope they will continue to reach new highs.
Remember also that indexes like the Dow should not be used to benchmark your individual performance. At 131 years old, the Dow Jones Industrial Average is the second-oldest U.S. stock index still in use (the Dow Transports is the oldest), and it does have some limitations. It only includes 30 of the leading large-cap companies in the U.S., so it does not represent equities as a whole, much less a well-diversified portfolio. It is just an indicator of which way the wind is blowing in large cap equities, which is just one asset class in your diversified portfolio.
So enjoy the fact that equities are trending up, but don’t let overexuberance drive your decision-making. Rather than focusing on new highs in various asset classes, as always, we recommend focusing on factors within your control, such as saving, keeping investment costs low, having a proper asset allocation for your goals, and maintaining a disciplined spending plan.
Timeline of Dow components
Limitations of the DJIA
What’s the S&P Doing?
IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Halpern Financial, Inc.), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Halpern Financial, Inc. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Halpern Financial, Inc. is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Halpern Financial, Inc.’s current written disclosure statement discussing our advisory services and fees is available for review upon request.