Dow 40,000!

The Dow Jones Industrial Average closing over 40,000 seemed to pass without much fanfare. But it is a tremendous milestone that should be celebrated for a brief moment.

In November, 1999 James Glassman and Kevin Hassett penned the book Dow 36,000. At the time, the stock market was on its way to posting a fifth consecutive year of 20+% gains. It was a “new normal” where internet stocks were a “new frontier.” At the end of 1999, the Dow closed at 11,497.

At the time it was written, expectations were extremely optimistic. And the authors believed seeing the index swell by 300% would happen in no time!

The authors were right. The Dow did cross the 36,000 mark on it’s way to 40,000. We got there—eventually. But, It didn’t happen as easily as they were predicting.

There were many challenges along the way, some of which were downright painful. Here is a glimpse of what we had to endure for the Dow to improve more than 3x from 1999:

The first 50% market decline since the 1970s, with the Nasdaq down nearly 80%
A terrorist attack on our soil
A war
Political turmoil which continues today
3 consecutive down years (something that had not happened since the 1930s)
A full recovery in stock prices
A housing and mortgage crisis
The bankruptcy of blue-chip giants, Lehman Brothers and General Motors
Another 57% drop in stock prices.
Another full recovery
The “Santa Claus” near-bear market
A pandemic induced bear market with a 35% drop in 6 weeks—the fastest ever.
Another full recovery.
The highest level of inflation since the 1970s
The fastest interest rate increases in decades
The first time stocks—in yet another bear market—and bonds decreased in the same year since the mid 1980s. It was also the worst bond market ever!
And another full recovery in stock prices.

The authors of Dow 36,000 could not anticipate any of those events—none of us could. The market rarely, if ever, goes up and to the right in a direct and linear path. But it does—over time—go up and to the right.

At some point, we will be talking about the Dow breaking 100,000 (40,200 today), The S&P 500 breaking 15,000 (5,600 today) and the Nasdaq pushing through 50,000 (18,472 today). Benefiting from those gains will require what it always has:

Patience>
Fortitude
Optimism
Faith
A plan

We are confident we will get to those milestones. We just can’t tell you how long it will take or what we will experience along the way.

Thank you for your continued business and friendship. We look forward to helping you navigate to those next big moments!