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Originally Posted by 420SEL
"Using the Dow as a barometer is for rookies."
I have to dissagree on this one. While I certainly agree that using the DOW to benchmark your portfolio returns is for rookies at best, and insane at worst, the DOW is still one of the best measures of investor sentiment available. When you consider the fact that 99% of investors and their advisors are rookies, there is a significant majority who feed into this barometer.
"The Stock Market Barometer" by William Peter Hamilton is an excellent book, and even much more sophisticated technical analysis techniques still rely on movements in the DOW to provide confirmation of either directional change or momentum.
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Using Dow as your only decision making tool you are making the same mistake many investers are making today by trying to guess trends. Many Wall streeters make the case that the S&P 500 is the best indicator. Using the Dow only also does not indicate inflated value's on stocks which will lead to problems ahead.
Who bought Amazon when it was $325 a share $321 dollars over book value?