Dow Jones average closes above 14,000
BY LAURIE WINSLOW World Staff Writer
Saturday, February 02, 2013
2/02/13 at 7:24 AM
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It's been a long slog, but for the first time in more than five years the Dow Jones industrial average closed above 14,000 on Friday, returning to a level not seen since before the 2008 financial crisis.
The Dow closed Friday at 14,009.79, up 149.21 points. The Standard & Poor's 500 rose 15.06 to close at 1,513.17, while the Nasdaq composite rose 36.97 to 3,179.10.
As for how significant reaching the current level is, it depends on how one looks at it.
"You could assign some significance to the 14,000 number because it reminds people that we're finally getting back to where we were before the financial crisis, but there is no economic significance to the number itself," said Keith Goddard, CEO of Capital Advisors Inc. in Tulsa.
"Fears of the eurozone breaking apart have been a key factor holding investors back for the past two or three years," he said. "As we entered 2013, Europe had taken steps to take the worst-case scenario off the table. ... We got our own election behind us, so we seem to be in a window where the perceived risk is a lot lower ... than it's been for the past two or three years. And that may be why were seeing such a surge and strength in the market."
Investors have been on a roller coaster the last few years
The Dow, an index that is traditionally considered a benchmark for how the entire market is faring, has been rising fairly steadily for about a month - it gained 5.8 percent in January. On Friday, strong auto sales and optimism about U.S. job growth pushed it over the 14,000 mark.
Before Friday, the Dow had closed above 14,000 just nine times in its history. The first was in July 2007; the rest occurred in October of that year.
After the Dow hit a record close of 14,164.53 on Oct. 9, 2007, it fell almost steadily for the next year and a half. By March 9, 2009, it reached a low close of 6,547.05.
Reaching 14,000 is significant because it shows there is a lot of momentum, said Jake Dollarhide, CEO of Longbow Asset Management Co. in Tulsa. He said he has heard comments from some who think the Dow could hit 15,000 this year or next.
Still, Dollarhide urged investors to approach Friday's milestone with scrutiny and caution. Investors who already had money in the market can "pat themselves on the back" for taking a risk, he said.
And it's not too late for those who have cash sitting on the sidelines to get back into the market, Dollarhide said, but he advised against investing it all in one day. Instead, he recommends that those who want to re-enter the market do so over a period of six months to a year, putting money in every few weeks or so to take advantage of pullbacks.
"I find the most stressful days are the best days to buy," he said. "When the market is down 300 to 400 points, that is the best day to buy."
People should look at investing for the long term and not trying to catch a short movement of the market, said James "Skip" Nichols, president of Financial Planning Resources in Tulsa.
"I like to talk about owning great companies and not owning the stock market because the stock market is kind of a squirrelly thing," he said. "Why does it go up? Why does it go down? Nobody really knows."
But people can understand what companies do and what they sell, Nichols said. Merck, Coca-Cola and Microsoft, for example, are great companies that are managed well, were managed well through the fiscal crisis, and have increased their cash position and market shares.
Many corporations are exceptionally profitable at the current time, Nichols said, noting that companies in the S&P 500 have approximately 40 percent less debt than five years ago.
"I like to talk about buying in for the long haul, not buying in because we're getting a break right now," he said. "People need to look at four, five or six years from now."
The Associated Press contributed to this story.
Original Print Headline: Dow tops 14,000 in return to '07 levels
Laurie Winslow 918-581-8466
laurie.winslow@tulsaworld.com
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