Values Added

Dow Milestones

The Dow Jones Industrial Average (DJIA) isn’t a very useful index. The S&P 500 is a better way to track big US companies and better for most purposes is to use a total market index which includes another 3500 other US public companies. Okay, now that we resolved that issue, I ran across a fascinating table today, it covers how long it’s taken to go from one DJIA milestone to the next:

CLOSING
THRESHOLD
DATE CLOSING
THRESHOLD
REACHED
TRADING DAYS
BETWEEN
THRESHOLDS
CALENDAR DAYS
BETWEEN
THRESHOLDS
30012/31/1928
40012/29/19546,4949,494
5003/12/1956303439
6002/20/19597421,075
7005/17/1961564817
8002/28/19646991,017
9001/28/1965231335
100011/14/19721,9402,847
20001/8/19873,5735,168
30004/17/19911,0801,560
40002/23/19959751,408
500011/21/1995189271
600010/14/1996226328
70002/13/199785122
80007/16/1997105153
90004/6/1998182264
100003/29/1999246357
110005/3/19992435
1200010/19/20061,8792,726
130004/25/2007127188
140007/19/20075985
150005/7/20131,4602,119
1600011/21/2013139198
170007/3/2014153224
1800012/23/2014120173

To go from 2,000 to 3,000 took 14 years but to go from 11,000 to 12,000 took about a month. The milestones tend to drive news coverage but they aren’t very meaningful. Adding 1,000 to the Dow is a lot easier now than it was early on. Going from 17,000 to 18,000 requires a 5.8% increase, whereas as going from 2000 to 3000 required a 50% increase. We’d be better off to focus on percentage returns than milestones. Either way, the best approach is to keep investing routinely and avoid being out of the market so that when these bursts come, we gain the benefits.