Why Do We Care About Dow 20K?

It’s hard to believe, but we just wrapped up the first full week of trading since Christmas. And one of the major questions for 2017 has been when the Dow Jones Industrial Average will hit the major psychological milestone of 20,000.

#-ad_banner-#The Dow has been flirting with the 20K mark since December, moving as close as 50 points on Wednesday, January 11. But what does hitting 20,000 really mean for investors?

The short answer is “nothing.”

It’s simply our fascination with large round numbers — Y2K, when your odometer clicks to 100,000 miles, making over $100,000 or $1 million in annual income, etc.

On a more psychological front, Dow 20,000 means that those large 1,000 point moves aren’t what they used to be. You see, when the Dow finally doubled from 1,000 to 2,000 in 1987, that move represented a 100% advance. But a climb to 20,000 from 19,000 is a meager 5% rise. 

It just so happens that the Dow nearing 20,000 comes at the beginning of a New Year, when analysts and investors try to predict what’s in store for the next 12 months. If you’re interested in this sort of “fortune-telling,” here are a few predictions:


But here’s the interesting thing about how January ends. According to the StockTrader’s Almanac, the direction of January’s trading — in terms of gain or loss — has predicted the course of the rest of the year 75% of the time. What’s more, since 1900, the month of January has ended positive 81 times, or about 70% of the time, making it the month with the highest number of positive returns. On the flip side, February is a crapshoot. It ended positive only 60 times compared with the 57 times it ended negative.

These data points tell us a couple of things. First, the odds are stacked in favor of January ending positive, and thus the year ending positive. Second, it helps confirm my heavy allocation in equities.


—Sponsored Link—
BKIT: 200% By February 1st, QUINTUPLE Digit Gains By 2018
With the biggest breakthrough in insomnia since Ambien, little known BKIT may have just dethroned the king of sleeplessness with their new, patented formula. Act now and you could grab a fast 200% and much more later! See how here.

Many of you may recall that at this time last year my proprietary Maximum Profit system had my premium subscribers and I dramatically reduce our exposure to the equity market… and with good reason. In 2016, January ended down roughly 5% — one of the rare occasions where it didn’t dictate how the full-year market ended. During that month the market plunged nearly 10%, yet because the Maximum Profit system had been reducing our exposure to stocks, the portfolio was down less than half of that.

So while most investors were panicking that the “end” was near, I was comfortably sitting with a portfolio that was more than 60% in cash and nearly 80% in cash by the end of January.

Coming into 2017, my portfolio is fully invested in stocks, and the system just recently issued “buy” signals on three new stocks — a stark contrast to a year earlier. 

Two of the stocks the system recommended come from the same industry, but they tackle this industry from very different directions. One comes at it from the retail side of investing, or the consumer side, while the other is a publicly-owned hedge fund sponsor, helping larger institutional clients.

My third addition is a consumer goods company that manufactures and sells a product that’s in homes all throughout the world and is currently outperforming 93% of all other stocks in my database.

This just goes to confirm what I wrote about a month ago in StreetAuthority Daily — namely that there is reason to believe that the current bull market still has some legs. 

As I said back then: It’s not too late to get in on the last legs of this bull market. But in order to navigate the tricky final stages, you’ll need a proven, tested system to work for you. My proprietary Maximum Profit system is designed to identify only the absolute strongest stocks in the market — before they take off. We use two reliable indicators to trigger our “buy” and “sell” signals, and by using this my subscribers and I have made gains of 82% in 48 days, 118% in 86 days, 266% in 12 months — and more. To learn more about my service, follow this link.