Steven Reznik, Jay Cicone & Jason Brienen
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Professionally Speaking
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Jason Brienen
Dow Revisits the 10,000 Mark
After more than a year spent slipping down to stomach-churning lows before gradually clawing back some equity value, the major financial indices revisited territory not seen since early October last year. The new bull market, as it’s been called by many analysts, has featured a relatively steady rise from March lows. At times, it seems driven not so much by good news as by reports that turn out to be less dire than expected.
The Dow Jones Industrial Average (an unmanaged index of 30 widely held stocks) finished Wednesday, October 14, at 10,015.86. The Dow first touched the 10,000 mark on March 16th 1999 on its way up, reaching a peak of 11,750 on January 14th, 2000.
On May 31st, 2002 the Dow crossed 10,000 again, this time going in the opposite direction. The Dow stayed below 10,000 until December 9th, 2003 once again heading in the “up” direction. For the next 11 months the Dow traded on either side of 10,000 until November 2nd, 2004 when the Dow left 10,000 headed higher, setting out for eventual new all-time highs.
A new record high which remains to this day was set on October 11th, 2007 when the Dow touched 14,198. Surely “Dow 10,000” was history at this point, right? Wrong. One year later, on October 6th, 2008 the Dow once again crossed 10,000, and once again it was going in “the wrong direction”.
So here we are, over 10 years after the first “celebration” of Dow 10,000, celebrating the return of that much desired 5th digit to the Dow’s price after a yearlong absence. It is anyone’s guess how many more times we will see a 4-digit Dow.
I hope this brief price history of the Dow helps you better understand why we employ an active investment management philosophy. We continue to build core positions for our clients in growing healthcare companies. The two largest positions we have owned for our clients over the past dozen years have been Chiron (CHIR) and Celgene (CELG).
As the Dow was hitting 10,000 for the first time in 1999, Chiron was the largest core holding for our clients. Chiron was $23.19 a share on March 16th, 1999 (the day the Dow touch 10,000 for the first time). Seven years later, Chiron was bought out by Novartis (NVS) for $48 a share on April 20th, 2006.
With Chiron gone, we began to build a new core position for clients in Celgene. On October 26th of 2006 Celgene hit $50 a share for the first time. That day the Dow closed at 12,126. Three years later, through the most difficult of financial environments, Celgene is trading about 12% higher at $56 a share. The Dow is 9,999 as I type this letter (October 16th, 2009)
Combining this strategy of owning growing healthcare companies with a process for agreeing to sell shares when they go higher, and agreeing to buy shares when they go lower, has given us and our clients much success in a 10 ½ year sideways market.
While investors generally have been positive during the markets’ recent climb, it has been noted with alarm by analysts that the volume of equity holdings has actually decreased. Worried investors have been withdrawing equity holdings in favor of bonds, indicating that a significant numbers of investors missed out on the equity market rally.
Certainly, recent market and economic activity has been encouraging, but major questions remain. If you have questions about the markets in general or want to discuss your portfolio, please don’t hesitate to call me.
Sincerely,
Jason P. Brienen | Investment Consultant
Raymond James Financial Services, Inc.
Member FINRA/SIPC
1608 Metropolitan Circle, Suite A | Tallahassee, FL 32308
(850) 545-4033 Cell • (850) 386-1939 Office
(850) 298-4242 Fax • (800) 775-1114 Toll-free
Jason.Brienen@RaymondJames.com
www.JasonBrienen.com
www.RaymondJames.com
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