Take the Hill
The Dow Jones Industrial Average is making an assault on 20,000. The recent advance has been both broad and fast. According to my notes, the market closed at 17,888 on November 4th, that’s 26 trading days ago. We stand at 19,900 as I write this blog. If Mr. Market was a Marine, his command would be “take the hill”.
The number of market prognosticators talking about this milestone increases day by day. Our market strategist has been all over it. In yesterday’s Wall Street Journal, Jeremy Siegel was featured; he called for “Dow 20,000 by the end of 2016” about a year ago. My kudos to the astute professor. The Journal article went on to talk about who was predicting the next significant milestone.
Let me make a few comments on this phenomenon. First, the market will get to 20,000. You can count on that. More importantly, when the Dow reaches 20,000 it won’t care and it doesn’t matter. It’s just a number at a point in time. What matters more is that you are making investments which benefit when markets advance, given your own personal taste for risk.
Second, the more I hear predictions of “Dow 25,000” or “Dow 30,000”, the more I will be concerned that the element of greed is starting to play a bigger role in the market. We have been in a “fear mode” for several years, some would say since 2009. Last January and February we experienced big fear. More recently, September and October’s vacillation reflected increasing fear. Check the sentiment indicators if you want proof. The shift from fear to greed will bring a big change in the numerical Dow and an even bigger change in the characteristics of the market. A change of this type does NOT happen overnight, rather it occurs over time.
Sir John Templeton offered this advice many years ago: “We attempt to be greedy when others are fearful, and fearful when others are greedy.” I met Sir John on numerous occasions back in the 1980’s – his advice stuck with me and I hope it sticks with you.
So sit back and enjoy the ride. Measure your personal risk level, and adjust your portfolio accordingly. If you have any questions, please give me a call.
Last but by no means least, have a joyous holiday!
Ralph McDevitt
p.s. Thank you, Ember
Information contained in this report was received from sources believed to be reliable, but accuracy is not guaranteed. The Dow Jones Industrial Average is an unmanaged index of 30 widely held securities. It is not possible to invest directly in an index. Investing involves risk and investors may incur a profit or a loss. Opinions expressed are not necessarily those of Raymond James & Associates and are subject to change without notice. Raymond James is not affiliated with Jeremy Siegel.
