Word: dows
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Dates: during 1990-1999
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...have little doubt that the Dow will close above 10,000 soon, marking its first true breach of the landmark figure and spurring yet another round of news stories repeating what we've already heard: Dow 10,000 is perfectly meaningless, a number, nothing more. But it all seems like a lot of ink to spill over something that is nothing. In my view, the Number is a red alert to the smoke and mirrors that brought us so far so fast...
...stock market will not rocket higher or careen into a ditch just because the Dow notches a fifth digit. But Dow 10,000 is a critical plateau in that it will be the product of an extraordinary run. If the Dow had risen at its historical rate of 11% a year instead of its 24% average annual rise since 1994, it would now be nearing 6000, and we'd be years--not days--from popping the cork. No one can say when this period of outsized gains will end. But the same trends will not last forever...
...Japanese comparison is itself tortured because of our vast cultural and economic differences. Still, Dow 10,000 represents a similar shared trust in the system--a trust that drove Japan to giddy heights and a crushing fall. In the Standard & Poor's 500, Morgan Stanley reports that just 15 stocks (3% of the total) accounted for 52% of the index's gain last year. "The market" may be going up, but it's almost entirely on the backs of a favored few: GE, IBM, Wal-Mart, Merck--all Dow components--along with tech wonders Microsoft, Dell (which...
...weak, as now. And small companies are ripe for a wave of premium-priced takeovers by big companies using their stratospheric stock prices as currency. Some foreign markets also look attractive. These conditions have been in place for a while; patience is the value investor's cross to carry. Dow 10,000 probably won't alter many investing habits. But that big number has me thinking small...
...time.com/personal for more on Dow 10,000. E-mail Dan at kadlec@time.com See him on CNNfn Tuesdays...