Breakthrough or bust: Examining “Dow 20k”

On March 29, 1999, the Dow Jones Industrial Average
(the Dow) finished the trading day above 10,000 points for
the first time since the index was first published in 1896. It wouldn’t be until late 2010 until the Dow would (hopefully)
see its last days under 10,000, over 11 years after initially
cracking the five-digit threshold. For the past few months,
the stock market has been hovering around the next big milestone: 20,000. But how monumental of an achievement
is “Dow 20k” for the stock market?

The (in)significance of milestones

The Dow surpassing 20,000 has drawn significant attention
from the media since late 2016, especially given the Dow’s
rapid growth after initially surpassing 19,000 in November. However, not all 1,000-point gains are created equal. From
1896 to 1972, the Dow grew from 40.94 to 1,000, which represented an increase of 2,343 percent. The Dow closing
in the quadruple digits for the first time was indicative of
the index’s massive growth since its inception. The jump
from 19,000 to 20,000 is an increase of only about five percent. Though the timeframe of this increase was incredibly short, the growth itself is fairly unremarkable in the history of the index.

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