Custom Search

Friday, October 8, 2010

Dow Hits 11,000 First Time Since May 2010! What's Next?

Dow 11,000: What To Do Now??

The Dow Jones Industrial Average just traded above 11,000 for the first time since May 3.

What is about these round numbers?

They tantalize us, even though we know 10,000 or 11,000 is just a number, it’s a milestone that means something. In this case, Dow 11,000 signifies a long and painful slog from March 2009, when the Dow touched 666, yet far from the all-time high of 14,164, reached almost exactly three years ago, on October 9, 2007.

The first time the Dow breached the 10,000 mark was May 3,1999. For those of you keeping score, it might seem like we’ve gone nowhere over the past decade, but if you diligently rebalanced your diversified portfolio throughout the years, you should be OK.

When the Dow crossed for the first time after the financial crisis, it was almost exactly a year ago, on October 15, 2009. Here’s a segment that I did with Katie Couric and Anthony Mason on the CBS Evening News, where we talked about both the symbolic nature of the number and how to think about it going forward.

Experts will guffaw at this and note that our obsession with round numbers is just another example of allowing emotions to guide our investing. I prefer to use the emotional stirring as an excuse to get people to act! After all, the addition of 1,000 Dow points in the last year is a great opportunity to take control of your financial life!

Open your statements
Review where you stand
Take Risk Assessment
Re-balance according to personal goals
Beef-up cash for near-term funding

If you work with a broker or an advisor, you should:

Schedule appointment to review progress
Confirm how much service costs
Review and update your plan
Consider replacing managed funds with index or exchange-traded funds

View Larger Map

Sources: CBS News, CNN, MSN, Google Maps

No comments: