The Trump rally has finally pushed the Dow Jones industrial average above the 20K milestone. Financial advisors warn clients not to lose perspective.
"Whenever my clients talk to me about the performance of an index, especially the Dow, I always remind them that the Dow is only a measure of 30 stocks and not a broad measure of market performance," said Patrick Lach, a certified financial planner and founder of Lach Financial in Lousiville, Kentucky.
Surpassing 20K doesn't mean more good times are ahead, said Robert Cheney, a CFP with Westridge Wealth Strategies in Palo Alto, California. "When the Dow broke 5,000 in 1995, it basically continued screaming straight up," he said. "In the spring of 1999 when it broke 10,000 to much fanfare, it took another 12 years of suffering through the dot.com bust and financial crisis before it was meaningfully past 10,000."
As the Dow has climbed to new highs, bullish sentiment rose sharply since the election and then dropped back down in recent weeks. (See chart below.)