Sunday, July 6, 2014

Another Dow Milestone Falls

The Dow Jones industrial average closed above 17,000 points for the first time ever at the end of last week. It had taken about seven and a half months to get there, after crossing 16,000 for the first time on November 21 last year. And it was just six months prior to that that the Dow first reached 15,000.

If it seems like these milestones are falling faster than they used to, it's because they have become, in one sense, easier to reach. As the Dow gets higher, 1,000 points becomes a smaller and smaller percentage of its value. Remember, the index needed a 6.3 percent increase to get to 17,000, but a 6.7 percent increase to get to 16,000. And the further back you go, the more that percentage increased.

But the milestones have been falling faster recently. Although it took about 14 months to get from 15,000 to 17,000, getting to 15,000 itself was much more of an ordeal. After crossing 14,000 in July 2007, it took nearly six years for the Dow to reach that next 1,000-point barrier.

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