20,000 – Dow Jones Industrial Average Hits a Milestone

20,000 – Dow Jones Industrial Average Hits a Milestone

The Dow Jones Industrial Average just surpassed a major milestone – 20,000. The widely popular index of stocks has had significant gains since the close of the Presidential election, scoring many record highs. What is the significance and how does it affect your portfolio? Here is a breakdown:

1. What is the Dow Jones Industrial Average?

The Dow Jones Industrial Average is an index that has been around since May of 1896 and is composed of just 30 U.S. stocks. It is the most referenced index on television and newspapers and is often a barometer of investor sentiment.  Its use is so common, that if you asked the average American “How did the market do today?” they will invariably quote you the Dow.

The 30 stocks that compose the Dow have changed 51 times since the beginning of the index. The current composition as of today is:

Company Symbol Industry
3M MMM Conglomerate
American Express AXP Consumer finance
Apple AAPL Consumer electronics
Boeing BA Aerospace and defense
Caterpillar CAT Construction and mining equipment
Chevron CVX Oil & gas
Cisco Systems CSCO Computer networking
Coca-Cola KO Beverages
DuPont DD Chemical industry
ExxonMobil XOM Oil & gas
General Electric GE Conglomerate
Goldman Sachs GS Banking, Financial services
The Home Depot HD Home improvement retailer
IBM IBM Computers and technology
Intel INTC Semiconductors
Johnson & Johnson JNJ Pharmaceuticals
JPMorgan Chase JPM Banking
McDonald’s MCD Fast food
Merck MRK Pharmaceuticals
Microsoft MSFT Software
Nike NKE Apparel
Pfizer PFE Pharmaceuticals
Procter & Gamble PG Consumer goods
Travelers TRV Insurance
UnitedHealth Group UNH Managed health care
United Technologies UTX Conglomerate
Verizon VZ Telecommunication
Visa V Consumer banking
Wal-Mart WMT Retail
Walt Disney DIS Broadcasting and entertainment

2. Which components of the Dow 30 have contributed to its record highs?

After all the news reports since the election, you would think that every stock in the Dow Jones is at all-time highs. However, this is not the case.  In fact, since the election there are companies that are negative:

Company % Return (since election)
Johnson & Johnson -4.0%
Wal-Mart Stores -3.8%
Coca-Cola -1.6%
Cisco Systems -1.0%
Proctor & Gamble -0.3%

Most of the Dow returns have come from only 5 companies:

Company % Return (since election)
Goldman Sachs 30%
JP Morgan Chase 22%
Boeing 18%
Caterpillar 16%
IBM 15%

3. How does it affect my portfolio?

Mason & Associates strives to build diversified portfolios across many asset classes with a long-term perspective in mind. Like most professionals, we do not use the Dow Jones Industrial Average as a benchmark. Since the Dow is only 30 large cap stocks, we prefer to benchmark portfolios with broader indexes that represent tens of thousands of stocks, bonds, and alternatives (real estate, etc.). The Dow Jones at 20,000 is only significant for your portfolio in that it provides guidance as to the current investor sentiment.

Due to your portfolio’s diversified allocation, you may not capture all the recent upside of the Dow, but more importantly, you may not capture all of the potential downside either.  

As we approach year end, we will continuously monitor your portfolio and position the investments based on our economic outlook for 2017.

If you have any questions or concerns regarding the diversification and performance of your portfolio, give our office a call at (323) 254-3072 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it. .

About Brent

Brent M. Mason is the President of Mason & Associates, Inc.  Brent began his career in 1999 with Putnam Investments, where he was a vice president and served as the marketing manager for Putnam’s Insurance Products Division, specializing in the development and sale of investment vehicles within insurance related products. Brent earned a Bachelor’s Degree in Business Administration from Southern Methodist University, in Dallas, Texas where he focused on marketing and finance. Brent is a licensed California insurance agent and can offer life, health, variable and long-term care insurance products. Currently, he is a member of the Board of Directors at Hillsides, an organization that specializes in meeting the needs of at-risk children in the greater Los Angeles area. Brent lives in Pasadena with his wife Leah and their three beautiful children. He enjoys golf, snow skiing and spending time with family and friends.

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