What Do Stock Market Records Mean?
Both the Dow Jones Industrial Average and the S&P 500 closed at all-time highs on Friday. It seems that every week brings new record-breaking highs for the Dow and the SP500. The question is, what do all of these record highs mean. Should an average investor do anything when the stock market hits a new record? What Is a Stock Market Record High? Let’s start with the basics. While individual stocks on the stock market are going up and down based on their own merit, and supply and demand, the stock market is often reported as a single thing. What financial reporters and analysts mean when they say “the stock market,” is one of the indexes of the markets. There are numerous indexes, but the most widely touted are the Dow Jones Industrial Average and the Standard and Poors 500 index. When people say the stock market broke a record high, they mean that one (or both) of those indexes is higher than it has ever been. (You can’t invest directly in the indexes, which are just academic, mathematical statistics, but you can get close using index funds.) In a way, higher records are inevitable. Even if the intrinsic value …