Investors should stay focused, avoid getting swept up by Dow 10,000 excitement
Someone asked me if I was excited when the Dow once again hit the 10,000 mark. Nope. It was October 2008 when we last saw that five-digit number. On Wednesday, the Dow again closed above 10,000. Should we be cheering or remain cautious?
First, understand what the Dow is. It is the most widely used indicator of the overall condition of the stock market. It’s also just a snapshot comprising the 30 biggest blue-chip stocks.
The first time the Dow hit the 10,000 benchmark was in 1999, and its all-time highest close was 14,164.53 in 2007.
So what should we think of this most recent development? To find out, I interviewed some financial experts.
“It is a true nonevent,’’ said James R. Cotto, a financial strategist with Morgan Stanley Smith Barney. “It is nice that it is moving in the right direction, but it is relatively meaningless from a financial-planning perspective.’’
Dallas Salisbury, the president and chief executive of the Employee Benefit Research Institute, is not in awe.
Salisbury said that now, more than ever, individual investors should be trying to decide how much they can afford to lose in the stock market.
Don Blanding, chief executive of Investor Protection Trust, had a similar caution. “If you have been sitting on the sidelines since March because you have been scared to go in the water, don’t think this week’s ray of sunshine has warmed the surf much,’’ Blanding said. “Investing and risk go hand in hand. Make sure you have learned or relearned the basics of saving and investing.’’
It’s good for investors to have some recent and somewhat sustained relief from the wide and volatile swings of the past, said Surinam Elizabeth Paige, a certified financial planner with the Lighthouse Group at Morgan Stanley.
“Investors should stay focused on knowing their own numbers,’’ Paige said. “When I say their own numbers, I mean knowing what rate of return they need to live comfortably based on their own personal goals, their time horizon, and expected expenditures.’’
Ernest Burley, a certified financial planner with Burley Insurance and Financial Services based in Bowie, Md., said individual investors should see recent gains as another wake-up call that they have to have a financial plan. He says you should ask yourself three basic questions: What is the purpose of the money I’m investing? What is my time horizon? What is my risk tolerance?
For me, watching the Dow is like riding a roller coaster. The climb up is exciting. But then you hit the top and, in seconds, you’re being plunged downward or sideways or up again. It can be exhilarating. In my younger years, I would laugh and scream. Now, when I go on a roller coaster, I feel a little sick to my stomach, so I only ride occasionally.
When it comes to the Dow, I don’t pay much attention to the daily fluctuations. I can’t stomach that day-to-day ride. Besides, who needs all that stress?
Michelle Singletary is a columnist for The Washington Post. 
