Roundtable: Dow 10,000. What Now?

So the Dow hit 10,000 again yesterday. It’s just a number, so we won’t dwell on it.

What we will talk about is whether we’re better off now than the last time we were at 10,000 (last year). We’ll also Foolishly hypothesize about which companies will prosper if we hit 15,000. And which will prosper if we drop to 5,000.

Without further ado, let’s see what three of our analysts had to say.

The Dow was around 10,000 a year ago, went down below 7,000, and just recovered to around 10,000. After bailouts and stimulus efforts, how much better off (if at all) are we today than last year?

Rick Munarriz: We're a lot better in nearly every sense. Consumers see the light at the end of the tunnel. Analyst estimates are inching higher again. Companies have also taken dramatic steps to improve their bottom lines over the past year. 2009 will be remembered as the year in which even Microsoft (NASDAQ:MSFT) announced layoffs. Meanwhile, Dell is committed to obliterating $4 billion in annual costs by the end of next year. We can curse these companies for packing that kind of fat a year ago, but the important thing is that so much more of every dollar generated in revenue will trickle its way down to the bottom line.

Matt Koppenheffer: How much better off are we? Well that's a loaded question if ever I've heard one. On the one hand, consumers have backed off the ledge that they were on this time last year -- which means they just may buy that flat-screen TV they've been eyeing at Best Buy. Businesses have also become a little less jittery, giving hope to everyone from transportation companies like CSX to technology providers like Oracle.

But on the other hand, if JPMorgan Chase's earnings were any sign, there's still little that's really changed in banking -- a major contributor to getting us into such a massive mess. And don't even get me started on what happens if the government pulls out the cash IV that it's been providing.

Morgan Housel: There are two ways to answer that question. First, it's indisputable that credit markets are more stable now than last October. Things like LIBOR and the TED spread were just off the charts last year, and today are back down to levels that would be considered normal in any healthy year.

But a lot of those improvements are thanks to policies that are both temporary and experimental, so no one really knows what the final outcome will be. Will excess bank reserves turn into excessive, speculative lending? Could happen. Will temper tantrums return when the Federal Reserve's emergency programs like TALF, or the purchasing of mortgage-backed securities, end? They certainly could.

So while we are better off than we were this time last year, I'd say it's premature to write the financial crisis' obituary just yet. It's easy to look healed when you cover up your wounds.

Give me one stock that would survive if we hit Dow 5,000 and one that would thrive if we hit Dow 15,000.

Rick Munarriz: I am going to get laughed out of this roundtable, but I think Sirius XM Radio (NASDAQ:SIRI) will be a big winner if the Dow quickly barrels toward 15,000. It's a high beta stock. It has appreciated several times over during this year's rally. If the Dow is at 15,000, it means that consumers are feeling pretty good, and satellite radio subscriptions will be a popular leisurely indulgence.

If the Dow hits 5,000, I'll go with Netflix (NASDAQ:NFLX). This was one of the few leisure stocks to appreciate in 2008, because recessions are made for couch potatoes with unlimited DVD rentals. The stock hasn't been a leader in this market rally, but its all-weather fundamentals will serve it well if the next step is down. 

Matt Koppenheffer: Health-care reform be damned. Johnson & Johnson (NYSE:JNJ) strikes me as a company that will fare well even if the market gives up the ghost. And if the market keeps up its charge? Keep your eye on exciting, high-growth stocks like Intuitive Surgical (NASDAQ:ISRG).

Morgan Housel: When the world was coming to an end earlier this year, I looked at my Philip Morris International (NYSE:PM) stock with great glee. There are few companies in this world whose products are as sought-after and recession-proof, and even fewer that are loathed so much that shares consistently stay compressed, and hence dividend yields high. It's a wonderful combination.

As for Dow 15,000, getting there within the next few years could probably only be done through rampant inflation or a dramatic revival of consumer spending. Both I'd say are improbable, but if consumer spending really springs back, niche consumer discretionary companies that are extremely well run, like Coach (NYSE:COH), I'm sure would do well. 

We’ve given you our opinions. Let the discussion begin in the comments section below!