So, the Dow Jones Industrial Average is over 10,000.
“So what,” I hear legions of rational, pedantic thinkers grumping in response to all the media chatter. After all, 10,000 on an arbitrary measure is really no different from 9,999 or 10,007. It has no concrete value as such, such types say. A bunch of guys and gals in New York pick and choose what 30 companies they put in the DJIA, so the measure is about as unscientific as possible.
Reaching just over 10,000 doesn’t mean the bull market is back, as some ignorant breathless types are likely to presume, or which would allow smarter types to think. And being just below it doesn’t mean the world is darker and more dire.
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But we’re all humans – at least most of us are – and our little brains and primitive emotional systems are keyed to search for and find signs that Mean Something Big, and so lots of people out there are likely to fasten on the plus-10,000 DJIA as a portent of happy times to come.
And you know what? That can have a real-world effect, in that if enough people get all happy and joyful about the post-10,000 Dow it can help drive the stock market higher. We can, at least temporarily, wish ourselves towards a better future. It’s like the situation in Foucault’s Pendulum, a novel by Umberto Eco, in which a group of smartypants men invent – just for fun – a big conspiracy combining all sorts of little mysterious groups in society, they begin talking about it, and then see it come true. The people in these little groups begin believing this BS themselves, after they hear it, and begin acting as if they truly are involved in a conspiracy, and begin to carry out its dark designs. A conspiratorial echo chamber. Maybe we’ll get a reflation conspiracy.
So perhaps plus-ten-thousandness will give us a few happy days, before the market gets back to the cold reality of assessing what the longer term outlook is. If we’re back in a bull market, wonderful. If this is just the last euphoric blow-off of the post-March 9 rally, ten we’ll settle in for a colder winter. Either way, let’s momentarily bask in the glow of a five-digit Dow.
(Perhaps it’s the blow-off scenario, because in between starting writing this post and getting to the end, the DJIA has dropped to 9,978. But Since that’s just 22 points shy of 10,000, and 10,000 doesn’t mean much anyway, I shouldn’t read too much into it. But then again, if everyone begins thinking it was the blow-off, and acting as if that’s the case, then . . . Â )
