KUSA – The Dow has its sights set on 20,000: in Wall Street terms, it has a mythical sound to it, but it could become reality very soon.
“When the Dow hit 10,000, people said, ‘Well, it’s 10,000, but it will never go to 20.’ And now, here we are on the brink of hitting 20,” said Mac Clouse, a professor at the Daniels College of Business at DU.
Not that long ago, 20,000 may have seemed out of reach. In November of 2008, the Dow hit a low of 7,449. However, it then began climbing and more than doubled within five years, to more than 16,500 in December of 2013. On Thursday, it closed at 19,918.
Yet, the Dow Jones Industrial Average is just that – an average.
“The Dow Jones Average is really only made up of 30 stocks,” Clouse said.
Those 30 stocks can change over time; there are around 3,000 on the New York Stock Exchange.
“They’re the blue chips and the ‘blue chip’ came from the fact that the blue chip was always the best poker chip in poker – so those are the highest valued stocks,” Clouse said.
So, while some analysts don’t place too much emphasis on that number, they admit it can serve as an encouraging sign about the economy and make people feel better about it.
“For people, psychologically, it’s kind of a wealth effect. People think, ‘well, I must be wealthier now because my 401k statement that I just got has higher numbers in it, so I’ve got greater wealth than I did before,'” Clouse said.
Analysts say what is unusual about the Dow approaching the 20,000 mark is that it’s happening now, during the holiday season, when things usually slow down on Wall Street.
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