Dow 40K - Wow

[peakbagger]

I know it is just a number but back in High School I remember the Dow hitting 1000 and it hitting 2000 in 1987.

My investments are pretty conservative post-retirement with all sorts of diversification thanks to Vanguard but even though I miss the peaks, I also miss the troughs. Nevertheless, the trends are all up for the long term.

I do seem to remember a lot of big names and headlines about the market tanking "any day now" starting about two years ago. Had I adopted the Walt Disney lemming approach (now proven false) I would be out a nice bump in the portfolio over the last two years. Sure it will go down again but in the long run diversified equities have been nice long term place to be.

https://www.adfg.alaska.gov/index.cfm?adfg=wildlifenews.view_article&articles_id=56

 

[EbS-P]

How many companies listed on the Dow in 1987 are still there?

 

[peakbagger]

Probably not that many, it was intended from the start to reflect large cap industrials and the economy has radically changed so the list will change.

BTW most inflation indices show that a 1987 dollar is worth $2.87 of today's dollars so Dow 40000 when adjusted to 1987 dollars is 13,937. If my quick math is right that is 5.3% long term rate of return not including inflation or taxes.

 

[bigealta]

The stock market climbs a wall of worry.

 

[bigealta]

Fear of loss is much more powerful than the joy of gain.
That's why it's so hard to stay invested.
But over time and ups and downs, staying invested has been the way to go through the stock market's inception.
Same is true for real estate, even with an almost 15 year downturn in the late 80's.

 

[begreen]

Probably not that many, it was intended from the start to reflect large cap industrials and the economy has radically changed so the list will change.

BTW most inflation indices show that a 1987 dollar is worth $2.87 of today's dollars so Dow 40000 when adjusted to 1987 dollars is 13,937. If my quick math is right that is 5.3% long term rate of return not including inflation or taxes.

The DOW lost almost a quarter of it's value in Oct 1987. The companies then were:

Allied-Signal Incorporated	Eastman Kodak Company	Navistar International Corporation † (formerly International Harvester Company)
Aluminum Company of America	Exxon Corporation	Philip Morris Companies Inc.
American Can Company	General Electric Company	The Procter & Gamble Company
American Express Company	General Motors Corporation	Sears Roebuck & Company
American Telephone and Telegraph Company	Goodyear Tire and Rubber Company	Texaco Incorporated
Bethlehem Steel Corporation	International Business Machines Corporation	Union Carbide Corporation
The Boeing Company ↑	International Paper Company	United Technologies Corporation
Chevron Corporation	McDonald's Corporation	USX Corporation † (formerly United States Steel Corporation)
The Coca-Cola Company ↑	Merck & Co., Inc.	Westinghouse Electric Corporation
E.I. du Pont de Nemours & Company	Minnesota Mining & Manufacturing Company	F. W. Woolworth Company

Fast forward to 2024 and the current companies list has changed a lot with tech, health, and financial companies taking the lead over a lot of manufacturing companies. The companies still on the list are in green.

3M Company	Dow Inc.	Microsoft Corporation
Amazon.com, Inc. ↑	The Goldman Sachs Group, Inc.	Nike, Inc.
American Express Company	The Home Depot, Inc.	The Procter & Gamble Company
Amgen Inc.	Honeywell International Inc.	Salesforce, Inc.
Apple Inc.	Intel Corporation	The Travelers Companies, Inc.
The Boeing Company	International Business Machines Corporation	UnitedHealth Group Incorporated
Caterpillar Inc.	Johnson & Johnson	Verizon Communications Inc.
Chevron Corporation	JPMorgan Chase & Co.	Visa Inc.
Cisco Systems, Inc.	McDonald's Corporation	Walmart Inc.
The Coca-Cola Company	Merck & Co., Inc.	The Walt Disney Company

Historical components of the Dow Jones Industrial Average - Wikipedia

en.wikipedia.org

 

[EatenByLimestone]

A couple weeks ago I pulled some profits out of my S&P 500 stuff and put it in BRK.B. Berkshire tends to do a better in down markets and still perform in up markets. I didn’t change my incoming investment allocations, just took some profits to a less volatile place. The PE ratio of the S&P is pretty high.

 

[bigealta]

A couple weeks ago I pulled some profits out of my S&P 500 stuff and put it in BRK.B. Berkshire tends to do a better in down markets and still perform in up markets. I didn’t change my incoming investment allocations, just took some profits to a less volatile place. The PE ratio of the S&P is pretty high.

Perfect example of the power of the "fear of loss".

Not saying that this moves timing is good or bad. Just showing the power of fear.'

 

[EatenByLimestone]

No doubt! I met my wife in our first career in investment banking. Overall, I’m still bullish. There’s just a little part of me that says proceed with caution. A 5% reallocation of assets doesn’t change a whole bunch of my risk profile!

 

[ABMax24]

Gotta wonder how many people have put money into Bitcoin for the same reason? Seems it may be a good long term hedge against inflation.

 

[bigealta]

Gotta wonder how many people have put money into Bitcoin for the same reason? Seems it may be a good long term hedge against inflation.

Bitcoin trades are non corelated to anything really.
Does not track inflation
Does not replace/track gold
Has no real mark to anything.
It really is pure speculation.
Speculation can make or lose you a bunch of money at anytime.

I have about 1% or so in a couple bitcoin etfs.

 

[begreen]

I'll step out on a limb here, but my gut tells me that the AI boom is going to implode for several reasons.

 

[ABMax24]

Bitcoin trades are non corelated to anything really.
Does not track inflation
Does not replace/track gold
Has no real mark to anything.
It really is pure speculation.
Speculation can make or lose you a bunch of money at anytime.

I have about 1% or so in a couple bitcoin etfs.

Arguably that's the beauty of it, it's an asset class of its own.

We'll see in 20 years. Something tells me a lot of people will regret having not invested in it.

 

[stoveliker]

I'll step out on a limb here, but my gut tells me that the AI boom is going to implode for several reasons.

I hope you are right

 

[bigealta]

Arguably that's the beauty of it, it's an asset class of its own.

We'll see in 20 years. Something tells me a lot of people will regret having not invested in it.

Or pyramid scheme.

 

[Highbeam]

I do seem to remember a lot of big names and headlines about the market tanking "any day now" starting about two years ago.

One thing I have learned since getting into finance as a hobby is that there are always people saying the market is about to fall and there are always people saying the market is about to rally. Nobody really knows.

 

[EatenByLimestone]

True dat!

 

[EatenByLimestone]

Will we hit correction territory for the S&P500? Down almost 7% in 1 month.

 

[stoveliker]

Bitcoin trades are non corelated to anything really.
Does not track inflation
Does not replace/track gold
Has no real mark to anything.
It really is pure speculation.
Speculation can make or lose you a bunch of money at anytime.

I have about 1% or so in a couple bitcoin etfs.

Turns out that *in this instance* it's correlated (not anticorrelated, so not a good hedge) with the general stock market ... Bitcoin down a lot too.

 

[EatenByLimestone]

I noticed that today. Same with gold. The only thing that stood out was treasury yields are down, so there’s buying pressure driving the price on the 10 year treasury up.

Odd that people are pulling so much cash out, unless they’re getting ready to make a big buy in.

 

[hearthon]

I bought quite a bit today, was sitting on 1/3 cash abd couldn't resist buying some stuff. Don't think we're at the complete bottom but hopefully pretty close.

 

[ABMax24]

The market appears frothy right now, many stocks are making fairly significant movements on small catalysts. I've slowly sold off all my stocks in the last couple months, dumping the last few Friday morning. I'll probably dabble in commodity futures or bitcoin in the next few months, but as a whole the risk/reward doesn't appeal to me for equities at the present time.

 

[bigealta]

Hearthon, - I Had some limit orders filled today too. I'm in for the long run so nibbling when prices fall.

 

[hearthon]

Exactly, I didn't go all in but deff picked up a few shares here and there. It's hard to pass up on 20%-30% discounts, I bought a company that is down I believe around 60%.

 

[ABMax24]

I noticed that today. Same with gold. The only thing that stood out was treasury yields are down, so there’s buying pressure driving the price on the 10 year treasury up.

Odd that people are pulling so much cash out, unless they’re getting ready to make a big buy in.

Leverage, whether it be the retail customer or most likely the largest organizations, you got to be pretty in-tolerant to price declines. Liquidation of margin positions is what is being blamed for much of the 12.4% loss in the Japanese Nikkei yesterday.

I seen it lots its the bitcoin market starting at least 3 months ago, liquidation of leveraged longs and shorts were amplifying what should have been small movements in price.