FIRE Station Fun- Market Milestone

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Yesterday was an exciting day in stock market history as the Dow Jones Industrial Average set another new record, breaking the 20,000 mark for the first time.  It certainly has come a long way when you look at this chart that stretches back to the 1970s …

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I am old enough to remember when it broke 1,000 in November of 1980, as I recall reading about it in the morning paper in the library at my high school.  It was actually the second time that it broke 1,000 – it originally hit the milestone in 1972, but slumped when the economic malaise of that decade set in.

When it hit the mark in November of 1980, it was credited as the “Reagan Rally”.  He had been elected weeks earlier and investors were said to view his election as positive for stock market valuation.

This article on USA Today looks at the run of stock market growth that has happened since last November’s election of Donald Trump.  It declares it one of the strongest ‘Honeymoon Periods’ that the market has seen after the election of a new President.

Trump has only been in office a few days so far.  What matters is what happens over the coming weeks, months, and years.  On the first day of trading this year, my friend Russ and I bet a beer on where the market will sit on Independence Day – about six months into the Trump administration.

Our over / under number is +4.5% growth, which equates to DJIA at 20,600.  

What would you predict?  Would you take the over or the under?

Image Credit: Pixabay

13 thoughts on “FIRE Station Fun- Market Milestone

  1. I’d go over. Granted I have the hindsight of the last month that you two didn’t. Things could shift and revert backwards as the honeymoon ends, but I’m sticking with the over. I think the economy is solid and will continue to improve, thereby supporting the rise in stock valuations. I look forward to the post following Independence Day with the results!

    Liked by 1 person

    • It is certainly heading that direction now. Last year market was -10% at this point, but quickly swung to the positive.

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  2. I’m unclear on your math to get to 20,600. Do you mean 4.5% annualized, which would get the DOW to 20,450 in 6 months? Or was is 4.5% growth in 6 months (9% p.a.) for the DOW at 20,900 in July?

    In either case I will take the under, as the market has run hot for a long stretch, valuations are lofty, and the administration is floating trade restricting tariffs that will hurt corporate growth and profits, especially for the large companies that make up the DOW. I think the DOW may be below 20K in July.

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    • We bet on YTD growth versus where the market finished on 12/31/16. 4.5% growth over 6 months (not annualized). I agree that the market has quite a run and that a trade war, or other geopolitical conflict could slow the market quickly.

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    • I do think the outcome lies a lot on Trump – especially since it is a bet with a short time horizon. If he gets caught up in petty arguments (ie size of the inauguration crowd) instead of corporate tax reform, the market could slide back quickly.

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  3. Wait DOW broke 20,000? Boy I have been living under a rock lol.

    I’d take the over on this one given that Trump is planning on a lot of things to boost the economy.

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  4. Mark me as someone taking the under. Not because of any political leanings mind you. The market doesn’t tend to like uncertainty. I suspect when Trump starts changing things there will be some periods of that. Whether the market likes the changes is yet to be determined but I suspect changes themselves will drive downside volatility. I know it’s a gutsy call given how far were already up.

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    • Market valuation is pretty high right now. I took the under in our bet, too. Hope for the best, bet on the worst.

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  5. That’s a tough one. I would love to see great gains, but after seeing what just happened over the weekend with refugees being stranded at airports, I hate to see the numbers today. Only time will tell how much his policies will affect our wallets.

    Mad Money Monster

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  6. The market always goes up and down. I hope I will take it easy and enjoy the life, not the details 🙂

    off topic: can you write an article to explain how you calculated the monthly amount necessary during the retirement? . Can you tell us if you fit in what you planned before?

    I have some discussions with my husband, I followed our monthly budget and I said this is the expenses and this is the need, but he wants more …

    Liked by 1 person

    • That’s a good post suggestion! I don’t think I’ve ever really focused on that. The short answer is understand what you spend now and merely project how that might change. We were a bit ‘oversaved’ – but if we weren’t, that wouldn’t have held me back.

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