Dow 20,000 - What Does It Mean?

The financial media is completely focused on the Dow reaching 20,000, an all-time high. It's important for investors to realize that while seeing the Dow hit 20,000 for the first time will be a psychological milestone, it's really not that significant.

If you think about it, there's no more reason to celebrate Dow 20,000 than any other number that was recently reached for the first time.

Also, keep in mind that the Dow only represents 30 of the thousands of stocks that make up the broader US equity market. Because it only represents 30 stocks, outsize moves in any one of its components can have a big impact of the Dow. From example, the surge in shares of Goldman Sachs (which has benefitted recently from expectations of less regulations and higher interest rates) has contributed about one-third of the Dow's recent 1,000 point move since hitting 19,000 back on Nov. 22.