They call nice round numbers like 10,000 psychological barriers. As the Dow Jones Industrial Average buckled below that mark at yesterday's close -- the first time that has happened this year -- one is left to wonder if the market should see a shrink about the shrink in its valuation.
Rising interest rates a concern? Sure. You can't discredit that. If yields spike and you start getting attractive returns on money market funds, CDs, and bonds, that's going to pose a competitive threat to stocks -- if only in the near-term. But if rising rates are tied to a buoyant economy with improving corporate profits, that obviously has to be factored into the equation. I get all that. I do. But what's the deal with holding on to a number just because of all the zeroes behind it?
Dow 10,000 a barrier? Bah! It's barely a speed bump. Six years ago, as the media got all jubilant at the sight of the S&P 500 crossing the 1,000 mark, I was less euphoric. What's in a number, really?
"Did you ever have a car whose odometer hit 100,000? Odds are you were driving by Aunt Edna's Crab Shack or just pulling up to pick up some dry cleaning," I wrote at the time. "It was just another day in automotive living. Maybe you took the time to smile and reflect, but you were certainly not at your intended destination."
So, yes, I do realize that the S&P 500 is now a 9% slide away from revisiting that milestone. Six years of gains erased? Nope. Any good Income Investor reader knows that dividends don't factor into that equation. But what's the significance of the S&P at 1,000 or the Dow at 10,000?
A stock analyst who would blindly issue a buy rating at $50 and a sell at $100 would be laughed out of grade school. Where is the fundamental analysis? You're not even talking about the same basket of stocks: Dow components like Pfizer (NYSE:PFE) and Verizon (NYSE:VZ) weren't even in the index until a few weeks ago. Other Dow anchors like Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC) weren't in the mix five years ago.
So, yes, the Dow closed below 10,000. I get it. Wake me up when that, in and of itself, actually means something.
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Longtime Fool contributor Rick Munarriz really doesn't have an Aunt Edna. He also does not own shares in any of the companies mentioned in this story.
