Dow ends above 16,000 for first time as stocks jump | Hacker News Reader

Dow ends above 16,000 for first time as stocks jump

marketwatch.com

14 pointswerkmeister14 comments

Breaking News: The Dow goes above an arbitrary number!

I know we as humans have a tendency to assign meaning to things like this, but the truth is it doesn't make much difference.

Especially the Dow. Stop paying attention to it. It's a terrible measure of anything but what the Dow weightings are. First, it's only 30 companies, which is a tiny slice of the economy. Second, it's based on share price, not market cap, so companies that split less frequently tend to have a much larger effect on the average. Finally, it's not adjusted for inflation, so all of this "first time ever" business is meaningless.

If you're going to use a common index, at least use the S&P 500. Or better yet, the Wilshire 5000.

It matters because it matters to people. It's completely arbitrary, but sometimes humans just work that way. Like it or not, there are going to be individuals watching the nightly news tonight and will hear about the Dow crossing 16,000, and they will think "Wow, it's going up, I need to get in on this," and/or it will affect their confidence as consumers going into an important time of year for consumer spending.

The non-energy activity sector of the economy has been growing at a rate much faster than the physical, energy-related activity sector of the economy. This type of decoupling is terrible and can only last for so long. I would suggest checking out Tom Murphy's blog Do The Math where he examines this decoupling in awesome depth [1]

[1]: http://physics.ucsd.edu/do-the-math/2011/07/can-economic-gro...

An interesting article about the Dow Jones Industrial Average by Adam Davidson: Why Do We Still Care About the Dow?

http://www.nytimes.com/2012/02/12/magazine/dow-jones-problem...

Forget the Dow. The point is that the markets are doing well, despite all the negative coverage it gets from the media and so called pundits. Corporate profits are near all time highs. Companies are becoming more lean and mean. Innovation and the proliferation of new technology is shifting the paradigms of every industry at an unprecedented rate. Europe is finally starting to see a bottom. China has enormous potential of becoming a consumer market not only for itself but for the rest of the world. South America (Brazil mainly) is taming inflation and spurring healthier economic growth. I'm not going to go through the list of countries that are doing better than they were 3-4 years ago, the BRIICS are doing better, to say the least. The trailing P/E is at 17.6 which is below an average of 18.7 going back to 1956. Of course the markets are going experience more volatility and turbulence at times, but that's inherent. The markets can retrace 10%, which seems to be the number everyone is focused on, sometime in the next 3-6 months. The market can also run up 20% in 4 months and retrace 10% in the 5th month. How are you going to win that game?

> The point is that the markets are doing well, despite all the negative coverage it gets from the media and so called pundits.

I've seen negative coverage of the economy more than the (commodity and equity) markets. The two aren't the same thing.

The equity markets are the fastest economic indicator. Yes there is a dicatomy between the economy and the equity markets but they should not be separated. Also the it seems like you might not be watching financial news often enough because the most common phrase is "we are seeing growth but at extremely slow levels," "the economy is still weak," and many more that have a similar undertone.

I don't think you read what I wrote: I noted that I see negative news about the economy more than negative news about the financial markets.

If stocks are doing so well. why does the Fed continue easing polices? Wouldn't now be an OK time to at least cut the monthly amount?

Stocks are only doing well because of the Fed's easing policy. When they suggested even moderating the easing a month or two a go the market took a dip and they decided to just keep doing it a little longer.

The index also isn't adjusted for inflation, I believe.

It isn't: http://www.npr.org/blogs/money/2013/03/05/173515767/the-dow-...

> If stocks are doing so well. why does the Fed continue easing polices?

The Fed doesn't really care (directly) about the stock market -- the Fed's key concerns in monetary policy are (1) managing inflation, and (2) promoting full employment.

Well, the Fed is getting towards the end of its easing policies, assuming the promising employment data trend continues into the new year. What the article is saying is that the market seems to be getting past its anxiety about what that will be like:

“The market is becoming more and more comfortable with the tapering talk,” said Andrew Zimmerman, chief investment strategist at DT Investment Partners, in an interview.

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