Dow Breaks 14000: New Highs Since 2007?

[Ivan Seeking]

The Dow broke the 14000 mark today for the first time since 2007. The all-time high was I think 14,164, so we are very close to seeing new highs for the first time since the economy crashed.

 

[Greg Bernhardt]

Very good sign, but I have a hard time trusting anything. What happens when interest rates begin to rise and people start taking money out of the market? Will it have stabilized by then?

 

[Ivan Seeking]

Very good sign, but I have a hard time trusting anything. What happens when interest rates begin to rise and people start taking money out of the market? Will it have stabilized by then?

As I understand this, when the market crashed, a great deal of wealth turned to vapor. So to me the most important thing is that a tremendous amount of new wealth has been created. Eventually this wealth must manifest throughout the rest of the economy.

If people are taking new wealth from the market and distributing that elsewhere, that's a good thing. Right?

 

[Greg Bernhardt]

As I understand this, when the market crashed, a great deal of wealth turned to vapor. So to me the most important thing is that a tremendous amount of new wealth has been created. Eventually this wealth must manifest throughout the rest of the economy.

I wonder if the people who are making the new wealth were the people who lost it. In some cases maybe, in most I bet not, and that is the problem.

 

[Ivan Seeking]

I wonder if the people who are making the new wealth were the people who lost it. In some cases maybe, in most I bet not, and that is the problem.

Most people with mutual funds should be benefitting. That includes a good pecentage of retirement plans like the one we have.

 

[russ_watters]

[response to Greg] Nah, I bet most were the same people and I'd go further to re-characterize the issue: I bet most of the excessive gains and losses were never realized anyway.

 

[Ivan Seeking]

[response to Greg] Nah, I bet most were the same people and I'd go further to re-characterize the issue: I bet most of the excessive gains and losses were never realized anyway.

Funny how when the market crashed, the first thing people wanted to do is to pull out their money. But as you say, most people probably just sat it out and have now recaptured the previous losses.

It should be noted that the S&P is following suit with the Dow. Mutual funds are often invested in the S&P.

 

[jtbell]

The Dow broke the 14000 mark today for the first time since 2007.

Of course, 14000 isn't worth as much as it was in 2007. Applying the Consumer Price Index for December 2007 and December 2012, I get 14000 * 229.594 / 207.342 = 15502. So we still have a way to go before we really catch up.

I have to admit last month's gain does look good in my retirement accumulation, on top of the big gain we had last year.

 

[Ivan Seeking]

Of course, 14000 isn't worth as much as it was in 2007. Applying the Consumer Price Index for December 2007 and December 2012, I get 14000 * 229.594 / 207.342 = 15502. So we still have a way to go before we really catch up.

I have to admit last month's gain does look good in my retirement accumulation, on top of the big gain we had last year.

Picky picky, Of course it isn't necessarily reasonable to take the all-time high as representitive of the average value at the time the crash began. That could have been a transient spike even in a good economy.

A good bit better than the low of ~ 6500 right after Obama took office, in either case.

 

[Jimmy Snyder]

This is a bad sign. Historically, stocks have tended to go down after reaching a high.

 

[lisab]

No surprise to me - my 401k has been going gangbusters for several years now.

Go, economy, go!

 

[mheslep]

Of course, 14000 isn't worth as much as it was in 2007. Applying the Consumer Price Index for December 2007 and December 2012, I get 14000 * 229.594 / 207.342 = 15502. So we still have a way to go before we really catch up. ...

Yes, and at which point the real return will be flat on money invested in 2007 at the peak - flat over five years, so far.

 

[Ivan Seeking]

Yes, and at which point the real return will be flat on money invested in 2007 at the peak - flat over five years, so far.

But over doubled in the last four years - since April of 2009.

 

[jbunniii]

Looks like it broke 14000 again today, in the other direction. Now we can apply Rolle's theorem.

 

[lisab]

This is a bad sign. Historically, stocks have tended to go down after reaching a high.

Looks like it broke 14000 again today, in the other direction. Now we can apply Rolle's theorem.

Holy cow, Jimmy was right !

 

[jtbell]

They go uppity up up, they come downditty down down...

 

[jtbell]

...and they go uppity up up again. The Dow edged over 14000 a couple of times today, then ended a bit under, but still 0.7% higher for the day. Bungee jumping, anyone?

 

[Astronuc]

A note of caution - by Chuck Jaffe, MarketWatch

The market’s recent strong run has brought out the buyers, but also the bears — with a growing number of high-profile investing pros suggesting the better-than-expected results and a return to record highs is leading lambs to slaughter.

http://www.marketwatch.com/story/is-this-market-headed-for-a-correction-2013-02-07

 

[Jimmy Snyder]

Jaffe has hit the nail on the head. Caution is advised for investors who are buying or selling while those on the sidelines should consider reallocating in order to generate extra transaction cost benefits. This is no time for optimistic hedging nor for pessimistic backing and filling. In other words, the market is likely to either rise, fall, or remain steady going forward and therefor a balanced approach of buying, selling, and holding is recommended.

 

[lisab]

Jaffe has hit the nail on the head. Caution is advised for investors who are buying or selling while those on the sidelines should consider reallocating in order to generate extra transaction cost benefits. This is no time for optimistic hedging nor for pessimistic backing and filling. In other words, the market is likely to either rise, fall, or remain steady going forward and therefor a balanced approach of buying, selling, and holding is recommended.

Jimmy, you'd be amazed at how frequently you make my day .

 

[Jimmy Snyder]

Jimmy, you'd be amazed at how frequently you make my day .

Funny, Clint Eastwood told me the same thing.

 

[Ivan Seeking]

Jaffe has hit the nail on the head. Caution is advised for investors who are buying or selling while those on the sidelines should consider reallocating in order to generate extra transaction cost benefits. This is no time for optimistic hedging nor for pessimistic backing and filling. In other words, the market is likely to either rise, fall, or remain steady going forward and therefor a balanced approach of buying, selling, and holding is recommended.

Since they've been wrong up to now, obviously we should expect them to be right this time.

I would go with Smith Barney. They make money the old fashioned way. They churn it.

 

[jtbell]

The [Dow's] all-time high was I think 14,164, so we are very close to seeing new highs for the first time since the economy crashed.

As I write this, it's at 14,239, which is above both its all-time closing high of 14,164.53 and its record intraday high of 14,198.10. Both records were set in October 2007.

As previously noted, this doesn't take into account intervening inflation. And of course if one had stayed "invested in the Dow" throughout (e.g. by holding shares in its component companies, in the appropriate weights), and re-invested all dividends along the way, the total now would be significantly higher than the index indicates.