DOW 25k by 12/31/2017

[Free bird]

Come on 25k. Were within spitting distance. Just do it.

 

[W2R]

Come on 25k. Were within spitting distance. Just do it.

+1000

I can hardly believe it! At the moment it is at 24,835, which would be just 165 points short of 25,000.

Watching the Dow today feels like watching a horse race.

It's been a little over 10 years since I posted that infamous "Wheee!!!" post. But just think - - the Dow was only just barely over 14,000 then, and now it is at 25,000. Seems almost unbelievable.

 

[EvrClrx311]

Some fun context...

Equities as a whole have been shown to grow consistently at around 7.1% after inflation (more specifically, 6.8% to 7.3% over all rolling 40 year periods). So we can anchor the DOW to this 7.1% real return mean linear line over a LONG horizon. In 1, 5, 10, 15, or 20 year spurts it can do much different things, but over 40, 60, 75, 100 years it sits at 7.1%...

So how does that project onto the 14,000 DOW from 2007 vs the 25,000 today... $14,000 in November 2007 becomes $16,430 in Nov 2017 dollars.

So in 2017 dollars we see the 2007 DOW as $16,430... now applying this 7.1% LONG term linear line (the regression gravity of our market)... we can say that the 2007 peak of $16,430 (today's dollars) is $32,629 today.

We still have a little ways to go if we're going to get to the exuberance experienced in 2007. 30% more to go in fact. Of course, the market doesn't work so nicely. The bottom can fall out anytime between now and then... or it might fall out after then. If you get that part figured out, please let me know

And we'll dance around it in the mean time. I've spent a great deal of time trying to decipher exactly where that median (100 year) line SHOULD be today... I keep coming up with a number like 18,000. We'll regress eventually... through flat years or pull backs. And spend equal time above and below it in the long run, as it grows at 7.1% every year

I do suspect the 7.1% will continue for the long haul, but I can't say for sure.

Every decade the market tends to double... at least on a LONG horizon. This is why the number 100,000 by 2050 is thrown out there. Makes your eyes pop, huh?

 

[Free bird]

Risk appetite animal spirits tax cuts $trillion dollar deficits oh the humanity

 

[W2R]

Every decade the market tends to double... at least on a LONG horizon. This is why the number 100,000 by 2050 is thrown out there. Makes your eyes pop, huh?

If I am still alive in 2050 (at age 102), and if the Dow hits 100,000, I promise you will hear a faint "WHEEE!!!" coming from my house or from an old folks home nearby.

 

[Free bird]

I will be 90 in 2050. A whippersnapper. Something to look forward to. Gotta get more exercise & less exercised if I wanna blow out 90 candles.

 

[DEC-1982]

I wonder how many people are waiting to rebalance on Jan 2nd, 2018. If there are a lot like that, you may want to front-run them.

It's about having the discipline to stick to your written plan. Arguably too rigidly.

 

[audreyh1]

I wonder how many people are waiting to rebalance on Jan 2nd, 2018. If there are a lot like that, you may want to front-run them.

I have a few semiconductor stocks. Their price rise YTD has beaten that of the market, yet the P/E is not excessive and sometimes even lower than that of the market. The forward P/E ratio is ridiculously cheap compared to that of the S&P.

Yet, these stock prices dropped quite a bit the last 2 weeks. There was no news. The entire sector was sold off. The word was that investors were cashing out. I did not beat them out the door, so I am not selling, er, rebalancing out now.

Plenty rebalancing I’m sure including me.

But my experience historically is that the first week of Jan is usually quite positive thanks to the Santa Clause rally which continues into the new year. And the first trading day tends to pop. I’ve heard theories that new pension money is coming into the market Jan 2 so there are plenty of buyers especially at the close.

If a strong selloff has already started by Dec, then you don’t see thus effect, and early Jan is weak. Jan 2016 was like this as part of a 10% market correction due to the sudden collapse of oil prices in 2015.

Personally, the cap gains distributions we take in cash in Dec account for most of our rebalancing, so we’ve already “front run” the selling part, but we will be buying fixed income.

 

[jollystomper]

No Dow 25K by the end of today. I think I can live with that.

 

[Rianne]

just had a vision of being at the Kentucky Derby again. That was a long time ago, but same feeling.

 

[NW-Bound]

It's about having the discipline to stick to your written plan. Arguably too rigidly.

If one wants to follow a written plan, could have written down "I shall rebalance on the 3rd trading session of the New Year", or something like that to avoid walking in lockstep with everybody else.

Of course if the first trading session of the year is the day everybody is buying, then selling is good.

Plenty rebalancing I’m sure including me.

But my experience historically is that the first week of Jan is usually quite positive thanks to the Santa Clause rally which continues into the new year. And the first trading day tends to pop. I’ve heard theories that new pension money is coming into the market Jan 2 so there are plenty of buyers especially at the close...

This should be verifiable by looking at past records. And if it is true, why doesn't market efficiency take it away? Hmmm...

 

[razztazz]

If one wants to follow a written plan, could have written down "I shall rebalance on the 3rd trading session of the New Year", or something like that to avoid walking in lockstep with everybody else.

Of course if the first trading session of the year is the day everybody is buying, then selling is good.



This should be verifiable by looking at past records. And if it is true, why doesn't market efficiency take it away? Hmmm...

Because people do what they have a mind to do and the market is not particularly efficient. People just believe it is... or keep saying they believe it is... It's the conceit that must be believed in order for everything else people insist is true to appear true.

 

[W2R]

No Dow 25K by the end of today. I think I can live with that.

Well, probably not, but anything could happen in the next 3+ hours. I guess I am just greedy to even think of that.

Either way, it's been a good year for me, with the Dow up over 25% since 12/31/2016.

 

[Car-Guy]

No Dow 25K by the end of today. I think I can live with that.

Ain't going to happen in 2017.

 

[kgtest]

Ain't going to happen in 2017.

If you take off that 1/2 pt sell-off at the end of the market close today, we were only 1/2pt away from 25k. SOooooo close, just like the NFL and your favorite team that didn't quite win. I swear it's rigged

 

[W2R]

Ain't going to happen in 2017.

So near, and yet so far!

Still, I think that going from

19,763 on 12/30/2016, to
24,719 on 12/29/2017,

is absolutely amazing! I can manage to be happy about that.

We can wait until next week to top 25,000.

 

[audreyh1]

OK - so didn’t happen after all. Got close though!

 

[Helen]

A dream come true! We suffered through 2008-2009 together, and now is our time to enjoy the "up side".

OMG, this is getting dangerously close to a wheeeee! Please stop yourself

 

[W2R]

OMG, this is getting dangerously close to a wheeeee! Please stop yourself

 

[street]

When I retired in mid year 2016 the markets were sketchy and had a few friends say it is a really bad time for you to retire. I was nervous enough about my new life so with what the market is today is a blessing and a relief for me. I would not have believed anyone that the market would be so high.

 

[Ready]

I try to remind myself in times like these that years ago the media loved to write articles on how the market is overheated and is due for a major correction.


Of course, we know it's coming eventually. But it just reminds us that nobody can predict when, and ignoring all of the prognosticators who like to tell us what to expect is the best financial advice we can give anyone.

 

[CaptTom]

I think assigning deeper meaning to these "round" numbers and dates is just proof that the market is inefficient and driven by emotion as much as fact.

I did some minor re-balancing last weekend, mostly because I had time and it was somewhat overdue (over a year since the last change.) It was not really tied to any date or number, but did reflect some personal opinions about larger market trends, and the changes that have occurred in my AA since last time.

 

[joeea]

When I retired in mid year 2016 the markets were sketchy and had a few friends say it is a really bad time for you to retire. I was nervous enough about my new life so with what the market is today is a blessing and a relief for me. I would not have believed anyone that the market would be so high.

The markets were sketchy in mid-2016?

I must have missed that.

 

[joeea]

I think assigning deeper meaning to these "round" numbers and dates is just proof that the market is inefficient and driven by emotion as much as fact.

I'm not sure if "inefficient" is the right word here and I'm not sure the market is drive by emotion "as much" as fact. But at least some of the market is still driven by human beings rather than by computers.

Behavioral economics tells us that people assign meaning/value to round numbers, and that meaning often drives behavior.

Sellers learned that people purchase more when the price is $19.99 than when it is $20.00.

Similarly, some of the people here will be disappointed that the Dow didn't quite reach 25,000, even though that magic number has no more importance than 24,719.22.

 

[joeea]

I think assigning deeper meaning to these "round" numbers and dates is just proof that the market is inefficient and driven by emotion as much as fact.

I'm not sure if "inefficient" is the right word here and I'm not sure the market is drive by emotion "as much" as fact. But at least some of the market is still driven by human beings rather than by computers.

Behavioral economics tells us that people assign meaning/value to round numbers, and that meaning often drives behavior.

Sellers learned that people purchase more when the price is $19.99 than when it is $20.00.

Similarly, some of the people here will be disappointed that the Dow didn't quite reach 25,000, even though that magic number has no more actual importance than 24,719.22.