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Dow Hits 20000 for First Time
- jchendy 10y agoHere's an interesting podcast claiming the Dow is meaningless: http://www.npr.org/sections/money/2017/01/04/508261371/episode-443-dont-believe-the-hype http://www.npr.org/sections/money/2017/01/04/508261371/episo... The article might have already discussed this, but I can't tell because of the paywall.
- pilom 10y agoSo what? The Dow is a terrible indicator of even how well the stock market or the economy as a whole is doing. It is price weighted instead of market cap weighted so smaller companies that released fewer shares at a higher price have more impact on the Dow than larger companies. http://www.npr.org/sections/money/2017/01/04/508261371/episode-443-dont-believe-the-hype http://www.npr.org/sections/money/2017/01/04/508261371/episo...
- ceejayoz 10y agoIt's a mildly interesting psychological milestone.
- dude3 10y agoIt's also a good technical one. We hovered very close for over a month. Good earnings and we popped over.
- scurvy 10y agoIt's still important for the Dow Theorists (if there are any left).
- stonemetal 10y agoAlright how about NASDAQ and S&P 500 hit record highs at the same time.
- slaveofallah93 10y agoThat would be a much better headline.
- kchoudhu 10y agoEven better: RUA 3000 hits all time high. A broad spectrum index covering ALL publicly traded companies in the US.
- oculusthrift 10y agonon-inflation adjusted highs which drop out low performers.
- cmdrfred 10y agoMany also fail to consider the large number of stock buybacks when looking at the market. http://fortune.com/2016/04/25/buybacks-stock-market/ http://fortune.com/2016/04/25/buybacks-stock-market/
- dragontamer 10y agoThe Dow is supposed to be easy enough to do by hand. Around 12 to 15 stocks, all with just the price. Its an invention of the early 1900s. Its more of a historical measurement that we keep using because... well... it works. And people are familiar with it. But yeah, as the other posters have said: S&P500 just hit a record high. So the underlying fact is "Stock Market reaches new highs" by any sane measurement.
- SixSigma 10y agoAccording to this analysis (and I must admit, I cannot speak for it's veracity) "Significant comovements exist between the DJIA and US GDP." https://www.diva-portal.org/smash/get/diva2:311767/FULLTEXT01.pdf https://www.diva-portal.org/smash/get/diva2:311767/FULLTEXT0...
- steveplace 10y agoIt matters because we make it matter. It's psychological anchoring and it's a very real thing.
- whyileft 10y agoEspecially since people get voted out of office went the major indexes lose significant value. So there is significant political pressure to maintain increases just like there is in residential real estate. I have a hunch outside of extraordinary events we won't see many loses in any indexes going forward.
- mooreds 10y agoThis! So this! I wish that we could just drop the Dow entirely and focus on the more modern indices like the S&P. I understand it has historic significance, but let the DOW lie.
- forgetsusername 10y ago>I wish that we could just drop the Dow entirely and focus on the more modern indices like the S&P. I don't get it. Is someone forcing "us" to use the DOW in some manner? It is what it is, use the information how you choose. This reminds me of people who complain about how the BLS calculates specific measures of inflation or unemployment. They list their methodology. Either you find the information important and useful, or you can choose to ignore it. We don't have to "drop" anything.
- mooreds 10y agoNo one is forcing you, but when the cultural zeitgeist is behind it (reported every day in the pop news, especially when rising) it promotes mass financial illiteracy. I think it's a lost cause, just like the metric system in the USA, but dropping the Dow and focusing on more accurate measures would, in a small way, focus people's attention on more important economic news.
- bluGill 10y agoIt is a historic thing. Once (ie the 1950s) calculating the S&P500 took hours - newspapers did it after the market closed for the night and the number was one of the last things put into the paper before printing. The dow could be calculated in a few minutes so radio and TV could report on it. Thus if you were a trader focused mostly on one stock, updates on the dow gave you a picture of the market - if the dow was moving it was a clue that there might be larger economic forces in play that you need to look into so see how it affects your stock. Today we can calculate all the indexes several times a second. Thus the value of the dow (something easy to calculate) is not important today and we shouldn't use it.
- muizelaar 10y ago"The Dow is dumb! Calculating a price-weighted average of a small arbitrary group of stocks is no way to go through life, son, and no one should care if that average reaches 20,000." - Matt Levine from https://www.bloomberg.com/view/articles/2017-01-11/insider-trading-and-theoretical-indexes https://www.bloomberg.com/view/articles/2017-01-11/insider-t...
- choward 10y agoExactly. This is the most pointless economic indicator ever.
- cschneid 10y agoOther people have covered how the Dow is a mediocre stock index. The other half is that 20k doesn't mean anything either. It's just a number calculated by the math-function of the index. The psychology is mildly fun, just like a 50th birthday may be more celebrated than a 49th. Round numbers appeal to us. But 20k dow says nothing more about the state of the economy than the 19.9 dow did a few days ago.
- coldtea 10y ago>But 20k dow says nothing more about the state of the economy than the 19.9 dow did a few days ago. It's not the 20k vs 19.9 it's a) the record high, b) the upward trend.
- choward 10y agoMediocre? It's worse than that. It's worthless. Stock price means nothing.
- crusso 10y agoIt's ironic to see so many people posting about how the Dow and stock market mean nothing. If so, why did such noted liberal economists (like Krugman) make such dire predictions about where the market was going after Trump won the election? Are they to be disregarded because they obviously place a lot of importance on the stock market?
- nugget 10y agoRemember when nearly the entire business media predicted that if Trump was elected the stock market would crash immediately? Some of my smartest friends (at hedge funds) placed large bets mid to late 2016 that the market would decline. Now here we are. The lesson isn't that Trump is awesome for the economy (maybe he is, maybe he isn't) or that the market won't crash tomorrow (maybe it will, maybe it won't) but rather that even the so-called experts are relatively clueless when it comes to financial timing. Remember Brexit? Same story. Good lessons for the rest of us trying to invest. If you want to learn more, read 'The Bogleheads Guide to Investing' [http://fave.co/2jpTKmf http://fave.co/2jpTKmf] which is an excellent place to start.
- jwilliams 10y agoWith Brexit the pound also dropped significantly. Even if the markets truck along they've been devalued. The pound dropping has a number of effects (good or bad, it depends on your perspective). It pushed up the market in some areas where the were bargains to be had. It hammered others. It also changed the trade balance of payments Great in the short term if you're an exporter. Terrible if you're buying a supercomputer, or planning a trip. These sorts of things have a much longer term impact.
- tomelders 10y agoThis is sort of the same sentiment that people have towards things like Bird Flu. It didn't happen, so the experts were wrong, and it was all a load of hot air. But in actual fact a lot of people behind the scenes worked very hard to make sure it didn't become a problem.
- SlipperySlope 10y agoWould be great for Republicans if this boom persists through the 2018 midterm elections. When Trump's trade policies take hold there should be a rush to form manufacturing startups to make stuff in the USA for the industrial supply chain, e.g. power cords, circuit boards, paints, etc. I expect these to form in the traditional centers of manufacturing excellence - urban areas where minorities will enjoy relative job prospect improvements.
- celticninja 10y agoCan the US really make power cords cheaper than China or Vietnam? If they add tariffs to imports I'm sure they can but is manufacturing for the domestic market alone enough to create sustainable jobs?
- samsonradu 10y agoThey can't, it's a political statement. It will likely not happen but for a small range of high-value products.
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- ChrisClark 10y agoNope, unless it's all automated and paired with high tariffs. But then you might only create tens of jobs per factory instead of thousands.
- projektfu 10y agoThere are lots of articles about how the stock market is affected by elections, but few about how the stock market affects elections. The up market didn't make Al Gore win, for example, but maybe if it were down he wouldn't have pulled it so close. Who knows? Maybe people were feeling so high from the market that they wanted the low-taxes guy because they were feeling rich.
- nrjdhsbsid 10y agoTrump for all his craziness is vehemently pro business. I know the whole tech crowd wants him to crash and burn but the stock market rising is no surprise to me. Whether it's worth the damage done to the poor and the environment is yet to be seen.
- celticninja 10y agoI think many people dont want him to crash and burn. I think he was a terrible choice for president same as I think brexit was a terrible idea, but that's what we have got so I hope I am wrong on both counts. Why? Because I have to live in a world with both, so I don't wish for me to be right and everything to be shit, I hope I was wrong and everything is sunshine and fucking roses.
- deleted 10y ago[deleted]
- xname2 10y ago"the whole tech crowd wants him to crash" - is this an alternative fact? lol. Get downvotes for pointing out the "alternative fact".
- sctb 10y agoPlease don't complain about downvotes, the guidelines ask us not to: https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html. Additionally, this account has been posting mostly political or ideological comments. That's not what this site is for, and eventually we ban accounts that abuse it in this way.
- mikeryan 10y agoTrump for all his craziness is vehemently pro business. I think this might generally be correct however he seems to be more vehemently "Pro American Worker" and so far when that collides with his "Pro Business" stance the worker is currently winning. Attempting to get businesses to repatriate jobs is not necessarily a "pro-business" stance.
- notpc 10y agoThis is driven by expectations of Trump's deregulatory agenda. He says he's going to cut 75% of regulations. I can't believe this is happening. America is back people.
- celticninja 10y agoDepends which 75% of regulations he cuts. If he cuts EPA regulations and there is more pollution as a result of the increase in manufacturing this could result in more deaths in the long run. How about safety regulations get cut so manufacturing gets cheaper but more workers die in manufacturing plants, is that ok?
- jjawssd 10y agoFine, but what if there is a chance that the huge heap of regulations supporting entrenched interests is broken up? I'm looking at you Comcast
- harryjo 10y agoLet's see which regulations get cut first. So far, it's not the government contracting regulations. Bonus: when Trump "freezes the size of Federal employment" do you think that will be match by a freeze in contracting, or a boost in crony contracts?
- celticninja 10y agoStuff still needs to get done, so a hiring freeze means needing a workaround, they will find money for contractors because it is seen as a limited time expense, even though it is probably 3x or 4x more expensive over the long term. When they tell you they cut the size of government they won't tell you that government costs went up, or they will tell you government payroll is down and contractors get costed as something other than payroll.
- jjawssd 10y ago
- myf01d 10y agoDaily reminder that stock indexes in free markets have very little to do with the government.
- niij 10y agoDo you have any evidence of that? From my understanding the two are hand in hand. (note: I am not an investor)
- ihaveahadron 10y agoDonald trump
- thebiglebrewski 10y agoIf you had a bunch of money to put in the stock market, would you: - Put 1/3 of it in now and the other 2/3 in when the next crash hits - Wait until it all goes to shit and put it all in then, keeping it in a high-yield savings account until then (they make about as much as CDs these days) Would love to hear opinions!
- hisabness 10y agowait for the next crash.
- refurb 10y agoWhat's your time horizon? I typically just invest it all at once with no attempt to time the market. If i'm really nervous, i might make 12 equal investments over a year. Again, no attempt to time the market. The only time i've ever timed my investment based on the market is buying post crash. Getting a 3% return over a week was nice after the brexit slump.
- maaaats 10y agoTime in the market is better than trying to time the market. How long until next crash? When is the crash over and things start to climb again? You cannot know before after the fact, so it ends up being a big gamble. I'd say invest now, possibly over a few months if you want to spread the risk.
- bluedevil2k 10y agoYou have no idea that if "the crash" hits there won't be another one a week later. Timing the market is a fools game. Long term, low cost, investing is the only way to match the market
- smileysteve 10y agoYou Should Really Read This. "What If You Only Invested at Market Peaks" https://news.ycombinator.com/item?id=8210923 https://news.ycombinator.com/item?id=8210923
- dmode 10y agoJust a reminder that Dow Jones went up by over 140% over the last 8 years.
- ggiaco 10y agoRight. It was basically already at 20k (19,963.8) on Jan 6, with two weeks left for Obama's Presidency.
- dahdum 10y agoThat's correct, but the bull run started after the election results in November. I'm not exactly shocked that an ego-driven, heavily pro-business Republican President with full congressional control and majority of states under Republican governorship could drive the market up.
- bamdadd 10y agoListen to this episode of Planet money in 2013: Despite all the celebration, the Dow Jones industrial average has not hit record highs recently. If you adjust for inflation, the highs just aren't as high as they seem. And even if it does hit a real, inflation-adjusted high in the next few weeks, it won't mean much. The Dow is a seriously flawed stock index, and it's certainly not a good way to measure what's going on in the overall economy. On today's show, we rain on the Dow's parade and explain why a lot of very smart people say we should ignore the Dow. http://www.npr.org/sections/money/2013/03/12/174139347/episode-443-dont-believe-the-hype http://www.npr.org/sections/money/2013/03/12/174139347/episo... The Dow Isn't Really At A Record High (And It Wouldn't Matter If It Were) http://www.npr.org/sections/money/2013/03/05/173515767/the-dow-isnt-really-at-a-record-high-and-it-wouldnt-matter-if-it-were http://www.npr.org/sections/money/2013/03/05/173515767/the-d...
- wtvanhest 10y agoYes, the dow is a flawed index. That said, the S&P 500 & Russell 1000 are also at all time highs. https://www.google.com/finance?q=INDEXSP%3A.INX&ei=6-KIWNi7KIeejAHlwZq4Cw https://www.google.com/finance?q=INDEXSP%3A.INX&ei=6-KIWNi7K... https://www.google.com/finance?q=INDEXRUSSELL%3ARUI&ei=8eKIWJnQNof7jAG74ar4Cw https://www.google.com/finance?q=INDEXRUSSELL%3ARUI&ei=8eKIW... None of these data points mean anything on their own. People that look at a chart a conclude anything at all are not doing enough analysis.
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- i_cant_speel 10y agoI listened to that podcast when it got rebroadcasted. Even the people who are in charge of the Dow admit it's not a great tool for measuring the economy. They don't change it because the only thing it has going for it is the fact that the algorithm has been around for over a century. If they changed it, they wouldn't gain much and they would lose the only thing it has going for it, which is its standing as the oldest economic measurement used today.
- ilamont 10y agoWhat will happen to the Dow (and other indices) when the first serious geopolitical or financial crisis hits?
- codingdave 10y agoIt will go down. After that, it will go up again. Then down again. Then up again. Ad nauseum. The market fluctuates. If you want to put money away for the long-term, it makes sense to have some in it. For the short-term, not so much. This is all pretty standard stuff.
- nabla9 10y agoSo nominal stocks valuations are up. The real question is are valuations high or low. good indicators - Stock Market Capitalization to GDP (This is Warren Buffets's favorite). https://fred.stlouisfed.org/series/DDDM01USA156NWDB https://fred.stlouisfed.org/series/DDDM01USA156NWDB? - Q Ratio aka Tobin's Q Ratio (total price of the market divided by its replacement cost) - S&P 500 CAPE (PE10) and Shiller PE (PE) - S&P 500 Price to Book Value None of them alone, but all of them together.
- hetfeld 10y agoCan't read the article, it's behind paywall...
- xigency 10y agoI understand that people believe Trump is good for business. And I also understand that people believe Trump is good for the rich. And I also understand that people believe Trump is good for the blue-collar worker. But I don't understand how Trump could be a good influence, in the long term, on business and the stock market, when looking at his positions and policy changes. Why Trump isn't good for poor working class America - Assuming there's a large tax on every good coming into the country, then the cost of groceries will increase dramatically. The cost of cars will increase. The cost of consumer electronics will increase. The cost of many goods that Americans buy will increase and that will most directly affect the poor. Why Trump isn't good for business - Many American companies source their parts from other countries. Increased tariffs and taxes impact their bottom line. Trump wants American companies to hire American and is willing to enforce it. American workers have a higher minimum wage. This also affects the bottom line. Why Trump isn't good for the rich - If businesses are impacted then investments should decline, but if you've seen The Big Short, then it's possible that we could just have a fraudulent, unpredictable market instead. The huge tax cut should also benefit the rich, so actually, Trump does seem great for the rich. All in all, I'd like to hear what others think and why this sort of thought isn't widely circulated.
- soundwave106 10y agoFrom what I understand via articles, a lot of the current rally presumes that the talk of trade wars and tariffs is bluster... and that the rise is due to anticipated decreases in regulation and taxes making it easier for businesses. It is still very possible that serious talk about major tariffs and trade wars from Trump might cause a US stockmarket wobble, similar to how the FTSE wobbled after Theresa May confirmed her desires for a "hard Brexit". This IMHO is the main angle of Trump's campaign that is potentially very bad for the business climate. (Of course, there are many factors in a stockmarket's price so who knows. In the long run of course it is best to ignore day-to-day speculation. :) )
- steveplace 10y agoWhat makes you think "trump" is the stock market? The graves of investors have been dug with political shovels.
- plowman 10y agoThis is why Hacker News needs a downvote button. This is a non-story. The DJIA is an average of 30 stocks. Even if it was possible to figure out causation of stock market movement, the DJIA would be a terrible indicator of stock market movement. For more, see here: https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average
- dibujante 10y agoThere's no real evidence that the President has much of an influence on the economy.
- bdcravens 10y agoI agree 100%, but for as long as I can remember, presidents have received credit for the state of affairs on their watch, and used that as talking points while campaigning.
- dibujante 10y agoYeah :( It started with Kennedy, if I recall correctly, but it apparently took off and became a standard part of the presidential playbook.
- guntars 10y agoCan we not post articles behind a paywall?
- jpttsn 10y agoThe Dow is a bad index, but if it's the warmest year ever, we shouldn't focus on all that's wrong with the Fahrenheit scale.
- lytol 10y agoThe Dow is more similar to using a barometer and proclaiming it the warmest year ever. However, in this case, the thermometer just happens to agree.
- thegayngler 10y agoThis is nothing more than a sugar high before the inevitable Trump crash. He likes to take credit or stuff other people did. Then when Trump actually does something and it doesn't go well he pushes the blame onto someone else. The stock market indexes were already up significantly as a result of Obama's policies. I'm just not here for Trump or others assigning credit to Trump for something Trump had very little to do with. This is what you call speculation. Under Obama people had to prove out their finances. Under Trump gut feeling is enough.
- thegayngler 10y agoI got down voted for this. However, I was right that it was a sugar high and not based on the numbers. It was some blanket assumption that Trump would automatically be "good for the market" because "deregulation". Deregulation isn't always good. "Customers" will be a lot less likely to spend money if they aren't adequately protected when they do. Regulations also exist to protect the health and safety of the US citizens. It protects business from getting sued when they didn't follow the regulations. So businesses and consumers benefit from regulation and that there is no gain to be had here. We are just trading the small gains in stock price for lots of additional risk legally and otherwise. I didn't even bring up the fact that Trump may unwittingly get us into a trade wars with some of our biggest trading partners by threatening to go to war with them or threatening them with tariffs when they don't do what we say.
- mccoyspace 10y agoThe Venezuela stock market has had quite a run over the past few years too, but..... https://www.bloomberg.com/quote/IBVC:IND https://www.bloomberg.com/quote/IBVC:IND