Wednesday, March 20, 2013

Another thought on the all-time high... (originally posted 3/6/13)


Originally posted March 6, 2013 (changed web hosts and back ups only through 2/28 were transferred)

As I said yesterday, the share prices of the 30 stocks that comprise the Dow have moved to a level that assign it a number higher than it’s ever been.  Suggesting that the US market, which is comprised of roughly 15,000 stocks (there are 63,000 publicly traded companies worldwide btw), probably isn't best represented by an index tracking 0.20% of all the stocks traded in the U.S.

In fact, if we want to zero in a bit, and consider the major sectors of the U.S. economy (or I should say, the stocks that comprise the indices that track those sectors), 6 of the top 10 (financials, telecom, materials, utilities, industrials and energy) are still underwater from the 2007 peak.

My point?  Well, if you’re struggling with being in the market when the Dow’s at an all-time high (as I suspect investors were when it hit 200, then 500, then 1,000, then 5,000, then 10,000 and so on), there’s a much bigger picture (like the 62,970 other stocks in the world) to consider.

Am I predicting new records for as far as the eye can see?  Of course I am!  With giant black swans (impossible to predict events) creating nightmarish bear markets (that smart long-term investors will buy/rebalance into) from time to time along the way.


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