Market Update: Dow Breaks 19,000
We have reached a post-election, all-time high on the markets. This is a real confirmation from Wall Street that there is change in the air, and the activity does suggest that investors of all types like the direction of that change. We have seen very definitive upward activity in banking stocks, biotech/healthcare stocks and real optimism in general on the stock indexes.
Dow 19,000 provides us with that classic new-high threshold on the thousand mark. It has been nearly two years since the market last crossed one of these thresholds; The Dow first crossed 18,000 in December of 2014.
Why do we celebrate these milestones you ask? Well, because historically when we cross these milestones, the markets usually find more confidence and optimism and go higher still. Based on market data from the past 30 years, when the Dow has crossed levels like 2,000, 3,000, 4,000 ... all the way to 18,000, we can expect investors to push it up even higher, according to data from the research firm Kensho. The trend is true not just for a quick one-week return, but also one-month and one-quarter returns.
We have just witnessed one of the biggest political failures in history. Most all political analysts and pollsters were indicating a Hillary Clinton victory. Even the most reliable polls were showing a Clinton lead in the week heading in to Election Day.
As we witnessed this failure, we have also witnessed one of the biggest upsets and well-engineered victories in decades with President Elect Donald J. Trump heading for the White House in January. Usually the markets do not like upsets or unexpected outcomes. The markets abhor uncertainty. Yet it is very clear that investors and analysts of all stripes are very enthusiastic and optimistic with the post-election market indications.
While typical protests of recent years play out in the streets and in the media, Wall Street is an entirely different story. There are very powerful shifts and new trends occurring, and nearly all of them are pointing to higher markets and a better, more growth-oriented economy.
As always we need to practice caution and adhere to our long-term, disciplined strategy. We need to be prepared to endure downside volatility. But this week, we should all enjoy this optimistic and positive new high.
Ryan Craner, John Park, and Staff
These are the opinions of Ryan Craner and John Park and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. Diversification and asset allocation strategies do not assure profit or protect against loss.
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