Dow Jones Crosses Intrinsically Meaningless Milestone

By
Friday, April 09, 2010 at 5:30 pm

Investors, rejoice! The Dow Jones Industrial Average has crossed the 11,000 mark for the first time since September 26, 2008. The news has caused much breathlessness in a financial blogosphere hungry for good news. But, to throw some cold water on the situation, the number 11,000 is no more meaningful than, say, 7 or 912,384. Rising stock prices make money for investors and bring new entrants into the stock market. But they have only a tangential relationship to macroeconomic fundamentals. And, soberingly, having the Dow at 11,000 puts us precisely where we were in May 1999.

Follow Annie Lowrey on Twitter


Comments

26 Comments

Barboursville Man Hits Weight Loss Milestone | Lap Band Solution
Pingback posted April 9, 2010 @ 6:59 pm

[...] Dow Jones Crosses Intrinsically Meaningless Milestone « The … [...]


washington mesothelioma attorney « mesothelioma
Pingback posted April 10, 2010 @ 2:08 pm

[...] Dow Jones Crosses Intrinsically Meaningless Milestone « The … [...]


cartographer
Comment posted April 10, 2010 @ 3:35 pm

Not only are these round number milestones meaningless, the more fundamental error is that it's a good thing for investors when the market goes up. That depends on where you sit. It is good if you are “long” the market and a net seller, but it's a bad thing if you are “short” — and anyone who is a net buyer of stocks — such as a young person investing for retirement — is effectively “short” the market. If anyone in the financial media gets this he is not letting on, because all of them, all the time, treat a rising market as the best of good news for everyone. Advice to investors: pay no attention whatsoever to the financial media; get a few good books and study the actual financial reports of corporations.


spatula
Comment posted April 10, 2010 @ 4:03 pm

To say it isn't more meaningful than 7 or 912,384 isn't entirely true. Yes, the number in and of itself isn't any more or less meaningful, but humans being what they are often make decisions based on numbers of particular values.

For example, if a large enough group of people says, “I'm waiting for the market to hit 11,000 before I feel confident enough in economic fundamentals to start hiring again” then indeed, the number 11,000 suddenly has a great deal more significance than 7 or 912,384.

You can't completely overlook the psychological factors in play with the market, silly as they might be, because these are still human beings influenced by emotion and nostalgia who are making it work.


chrisjay
Comment posted April 10, 2010 @ 7:16 pm

Transcending the question of intrinsic vs symbolic meaning of these numbers is one stone cold fact:
Despite the doom & gloom prognostications of Obama/HCR critics, the market has continued to trend up & up & up in the wake of passage of the HCR bill.


Technical Trends On Stock Market – Bloomberg | Best Stock Trading tips.
Pingback posted April 11, 2010 @ 11:59 am

[...] Dow Jones Crosses Intrinsically Meaningless Milestone « The … [...]


leo
Comment posted April 11, 2010 @ 4:31 pm

“Dow Jones crosses intrinsically meaningless milestone.”

Actually, it's a healthy reminder that the Goldbugs and all the so-called experts who've been predicting a 'major correction' month after month since Obama took office are complete wrong.

Either Annie Lowrey doesn't know of these people or doesn't care.


Angelo_Frank
Comment posted April 12, 2010 @ 10:44 am

It's different this time. Dow 36,000.


Paul Gottlieb
Comment posted April 12, 2010 @ 3:41 pm

This news is actually double-meaningless, since if you apply the BLS inflation calculator, todays 11,000 is equivalent to 8,740 in 2000. Toactually match 2000, the Dow needs to break 13,845


Make Money » WATCH: Are the Bulls Back on Wall Street?
Pingback posted April 12, 2010 @ 7:31 pm

[...] Dow Jones Crosses Intrinsically Meaningless Milestone « Th&#1077 … [...]


Black Gold
Pingback posted April 12, 2010 @ 10:30 pm

[...] Dow Jones Crosses Intrinsically Meaningless Milestone « The Washington Independent [...]


share market
Comment posted May 14, 2011 @ 6:57 am

Your blog provided us with valuable information to work with. Each & every tips of your post are awesome. Thanks a lot for sharing. Keep blogging
share market  
 


Sonia
Comment posted June 2, 2011 @ 10:11 am

Great, thanks for sharing this blog post. Fantastic.norway flowers delivery


Bankruptcy
Trackback posted August 22, 2011 @ 4:33 pm

Immigration…

[...]we like to honor other sites on the web, even if they aren’t related to us, by linking to them. Below are some sites worth checking out[...]…


large rogue backpack
Trackback posted August 25, 2011 @ 8:20 pm

duffle bag black…

[...]below you’ll find the link to some sites that we think you should visit[...]…


pampered chef cut
Trackback posted August 26, 2011 @ 9:04 pm

wizardswaverly place edible…

[...]below you’ll find the link to some sites that we think you should visit[...]…


Quickest Way to Lose Weight
Trackback posted August 31, 2011 @ 2:47 pm

Netflix…

[...]listed below are a few web links to internet sites I always connect to for the fact we feel they will be worthy of browsing[...]…


Minority Scholarships for Women
Trackback posted August 31, 2011 @ 4:16 pm

Netflix…

[...]below are a handful of listings to internet pages I always link to since we feel there’re worthwhile checking out[...]…


Pension Advice
Trackback posted September 1, 2011 @ 9:47 pm

Where to Invest Money…

[...] Take some time to see these they might represent fascination too… [...]…


jobs in enigma ga
Trackback posted September 1, 2011 @ 10:05 pm

[...]Although not specifically related, we think they are worth checing out, so take a look[...]…


Ryan Reynolds Diet Plan
Trackback posted September 2, 2011 @ 10:09 am

Ryan Reynolds Workout Routine…

[...It's not so often you find a site that provides such value on the internet...]…


strategy war games
Trackback posted September 4, 2011 @ 1:29 pm

mmorts…

[...]This topic usually doesn’t interest me, but this article was written in a unique manner. It’s not boring and I read the whole thing without stopping once. Although unrelated to my blog, worth linking to[...]…


web design belfast
Trackback posted September 4, 2011 @ 6:37 pm

Business Ecommerce web design…

[...]check out the sites listed below, worth a read for ecommerce and web design enthusiasts[...]…


חדרי שינה
Comment posted September 6, 2011 @ 1:07 am

היי קבלו אתר בנואים עיצובים בעץ, עיצוב בעץ, פרקט. מומלץ מאוד!


Kasper Suits Petite
Trackback posted September 7, 2011 @ 12:41 am

Miss America 2011…

[...]the following are some web links to sites I always link to since we feel they really are seriously worth visiting[...]…


Stop sweating start living scam
Trackback posted September 7, 2011 @ 7:15 am

Stop head and facial sweat…

[...]these are just a few of my favourite blogs for you to visit sometime[...]…


RSS feed for comments on this post.

Sorry, the comment form is closed at this time.