What lessons can we learn from the rapidly falling and slowly rising Dow?
On Jan. 14, 2000, the Dow Jones Industrial Average closed at a record high of 11,722.98. It took over six and a half years for a new record of 11,727.34 to be set on October 3, 2006. On October 19th, it closed above 12,000. Of course, this new record is illusionary as the index would need to cross the 14 thousand mark just keep up with inflation. Never the less this is a psychological barrier that represents a healthy recovery of the equity markets to sound fundamentals after flirting with inane ideas such as abolishing the business cycle and momentum investing. Still, there is an undercurrent of gloating that implies that the market collapse was driven by greed and manipulation instead of real economic conditions. While blaming the victims of economic collapse for their own indiscretion can provide a cautionary tale, it might be of more use to apply the lessons of too much capital chasing too little opportunity to other aspects of life.