Another thousand Dow points higher, and investors yawn

Market milestones falling like dominoes, with 51 records broken so far this year

Oct 19, 2017 @ 1:42 pm

By John Waggoner

Not so long ago, phones would light up in an adviser's office when the Dow Jones Industrial Average broke through a 1,000-point barrier as customers clamored to invest. Today?

"Crickets chirping," said Steve Janachowski, CEO of Brouwer & Janachowski. "People seem complacent, and if anything, wondering if the market's overvalued and ready for a fall."

Of course, a 1,000-point gain in the Dow isn't what it used to be. It took the blue-chip index 76 years to break 1,000 points in 1972. It didn't break 2,000 until 1987, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Milestone fatigue could be setting in. The Dow blasted through 23,000 Wednesday with a 160.16-point gain, closing at 23,157.60. It broke through 22,000 in August, 21,000 in March and 20,000 in January. The Dow has set 51 new record highs this year.

Each 1,000-point gain is, of course, a smaller percentage gain from the previous one. When the Dow crossed 15,000 in May 2013, it had gained 7.54% from its first close above 14,000 in 2007.

MISSING OUT

And the stock market has come a long way from its bear-market low of 6,547.05. "People have already missed out, and, by and large, they know it," said David Haraway, principal at Substantial Financial, Inc.

(More: Searing lessons from the crash of 1987)

"We really haven't had folks clamoring to get in," said Mark Bass, financial planner with Pennington, Bass & Associates. "If anything, our folks are more interested in adding to asset classes that are negatively correlated or non-correlated with stocks, such as bonds, managed futures, maybe real estate."

Mutual fund flows seem to prove investors' wariness. Investors have yanked an estimated $50 billion from domestic stock funds and ETFs this year, according to the Investment Company Institute, the funds' trade group. Bond funds and ETFs have welcomed $320.7 billion in net new cash during the same period.

EQUITY OUTFLOWS

"The mutual fund equity outflows seem to confirm that there's more fear or risk-aversion than greed," Mr. Janachowski said. "I don't think investors in general buy into this up market. There is a general sense — maybe mostly because of the discord in Washington — that the upturn has been artificially market-driven and not based on fundamentals."

Not everyone is watching paint dry instead of the market.

"We have been getting a lot of new inquiries in the past couple of months and I think it is due to the strong performance in the market," said Alexander Rupert, associate portfolio manager at Laurel Advisors. "Either people are hearing the news about how strong the markets have been or people are looking at their statements, seeing more gains than they are used to and wondering if they are being smart when it comes to their finances."

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

What's the first thing advisers should do when they get home from a conference?

After attending a financial services conference, advisers can be overwhelmed by options, choices and tools. What's the first thing they should do when they get back to their office?

Latest news & opinion

Galvin's DOL fiduciary rule enforcement triggers industry plea for court decision

Plaintiffs warned the Fifth Circuit that Massachusetts' move against Scottrade signaled that the partially implemented regulation can raise costs for financial firms.

Social Security underpaid 82% of dually entitled widows and widowers

Agency failed to tell survivors that they could switch to a higher retirement benefit later.

Is Fidelity competing with retirement plan advisers?

As the Boston-based mutual fund giant expands the products and services it brings to the retirement market, some financial advisers say the firm is encroaching on their turf.

Gun violence hits investment strategies, sparks political debates with advisers

Screening out weapons companies has limited downside.

Whistleblower said to collect $30 million in JPMorgan case

The bank did not properly disclose that it was steering asset-management customers into investments that would be profitable for JPMorgan Chase.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print