Video: Market coach Doug Hirschhorn, PhD, discusses the four reasons why the Dow Jones reaching 10,000 does not really matter.
There has been an incredible amount of hype lately about the Dow Jones Index hitting the magic 10,000 level. So, I had to ask myself, does the Dow hitting 10,000 really matter? Well, here are four reasons I don’t think it carries the same weight it used to:
1. People are desparate While recovering from a year of pain, people are desperate to feel good about something. 10,000 is a nice round number with lots of zeros. That’s it. Don’t waste time reading too much into it because really, in the end, it is just another number.
2. Old rules are just that, old rules We are in a new financial world, with new rules created every day. What used to matter most doesn't matter so much anymore. And that kind of change scares people. So how do you beat that? It’s easy (but not necessarily fun). Simply become a student of the current game and learn new rules.
3. Comfort zone issues It's easier to look back today and embrace what used to make us comfortable in the past. Getting comfortable with a specific way of thinking can lead to three things:
- Sloppy trading
- Complacency
- Missed opportunities to outperform
You want to be successful in trading? Start to get comfortable with being uncomfortable.
4. The Dow is really just a worn down name brand Look, I'm a trading coach to the elite on Wall Street and I don’t have a single client who follows the Dow as a leading indicator. So, why would you? Rather, they look at the S&P, global commodities like oil, natural gas, or gold. They look for those things to tell them which way the market's going to go and how the enrironment is really playing out.
My advice, think like a champ, not like a chump.
Think better, invest smarter.