Don't Get Too Excited Over Dow Highs
The media is abuzz this morning with the prospect of whether or not the Dow will close at new all-time highs. I am amazed that people still pay such close attention to this lackluster group of stocks.
Now you are probably thinking, lackluster? Then why are they at new highs? But one of the reasons is that these stocks have done nothing for years. So the fact that they are finally getting a bounce this year is reasonable.
But do you think you have done well by owning T, PFE, GM, etc. for the last 4 years? The Dow is a traditional concept, but should not garner the headlines the way it did pre-1950, when it actually was an index of leading stocks.
The rest of the market is mixed to lower in the first hour of trading. Oil is hovering around $63, and the 10-year yield is up to 4.62%.
In other news and notes:
- FMCN reits guidance; featured in IBD today
- FDO beats earnings by 3 cents; stock lower
- AMGN gets FDA approval for colorectal Vectibix
- CHK shuts-in some production due to low nat gas prices
- CRAI beats earnings, raises guidance
- Final Q2 GDP revised to +2.6% vs. +2.9% consensus
- TXI beats by 5 cents
- MSFT: Zune to be available Nov. 14th
- ENER ups buyback, improves corp. governance
- Kerkorian files to buy more GM
long AMGN, FMCN, MSFT
posted by J. Kahn @ 7:44 AM
3 comments
3 Comments:
The new Dow highs sure make for a great story, but I think there are very few people who think that means a damn thing with the exception of the MSM and the few remaining literal Dow Theorists. The concept of a price-weighted index is very flawed. In my very rough, back of the envelope estimate, if MO had undergone a 2:1 split two years ago (which would have been totally meaningless to the stock), the Dow would be roughly 100 points lower. I don't see how you can take an index like that seriously.
You would be shocked how many people I talk to, not investment professionals, on a daily basis who only look at the Dow as a proxy.
So what you are saying is that attention paid to the Dow Industrials is how you can tell the amateur posers from the people who know what's going on? It's like using the word "golf" as a verb. No good golfer I know "goes golfing," we "play golf."
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