What do you get with a $100 million Renaissance? A timeless hideaway in the heart of Death Valley National Park. Now better than ever. Visit Oasis at Death Valley dot com. The Dow Jones industrial average has been flirting with 20,000 points for the last week or more, and it's got everybody quite tantalized.

At the moment, just very much looking forward to that magic 20,000 point mark. As I record the show right now on January 11, 2017, it's at 19,954 points. I think it's doing this little 90/10 rule for coming in for a kiss. We've come in 90 percent and it's just simply sitting there and waiting, waiting, waiting to make up the other 10 percent.

But here's the questions that matter, though. Number one, what does it mean for the Dow to be at 20,000? Number two, what does the Dow at 20,000 mean to you? And what should you do about a 20,000 point Dow Jones industrial average? But first, sponsor of the day today, number one is Paladin Registry.

Hey, if you're listening to this and you don't already know what Dow Jones industrial average is and what it means for it to be at 20,000 points, that might mean that you don't have a good financial advisor to talk to and call. And that might mean that you didn't already meet with a good financial advisor and ask them about that.

Well, listen to the show. But as soon as we hang up the show, go to radicalpersonalfinance.com/paladin and start your search for your next great financial advisor. radicalpersonalfinance.com/paladin. Also sponsored by Personal Capital. Personal Capital is the best financial dashboard for you to use to see all of your accounts and all of your money and the performance in one spot.

Because here's the deal. The Dow Jones industrial average doesn't tell you how much money you have or what the performance of your portfolio is. But Personal Capital can do that for you. Sign up for a free account at radicalpersonalfinance.com/personalcapital radicalpersonalfinance.com/personalcapital. Welcome to Radical Personal Finance, the show dedicated to providing you with the education and the insight that you need in order to live a rich and peaceful life now while building a plan for financial freedom in 10 years or less.

My name is Joshua Sheets and I'm your host. Thank you for being with me. Going to work very hard on that education and that insight today on this thorny question of Dow 20,000. A lot of people out there making a lot of noise about Dow at 20,000. What's always funny about records in the stock market indexes and things like that is there's such a just a kind of a clashing of of ideas and opinions on what it means.

I think of it like a place if you go out on a boat and when the tide is turning and you get two tidal currents where they meet, it's like these giant waves stand up where you get two currents that meet. It's just these big standing waves that sit there.

And I think of Dow or Dow or any stock index records as that. You have on the one hand, you have the bulls and the other hand, you have the bears and you have the bulls. The bulls are excited about the fact that, hey, we're in new territory. We're in uncharted territory.

The Dow at 20,000 points. Whoo, things are going up. Then you've got the bears. You're saying, oh, everything's going to be terrible. And in today's world of financial media, where there's such a diversity of opinion. I mean, the doom and gloomers are moaning and crying in their boots about Dow at 20,000, just saying it's the most obvious example of an overvalued market of all time.

Obviously, the Dow is at 20,000 and the economy is terrible. So therefore, everything's a nightmare. And on the flip side, of course, you can make the opposite case. So what does it actually mean? Well, hard to boil all of the meaning down into one short, little succinct podcast, but I'm going to do my best.

I want to start with just a little bit of background information, a little bit of insight. We're not going to try to do deep level financial analyst stuff. Just a little bit of information on what is the Dow Jones Industrial Average? Where does it come from? What does it actually mean?

How does it work? What does 20,000 points mean? It's one of the most commonly known stock market indexes. My guess would be that if you were going to ask normal people to name a stock market index, most normal people would begin with listing off the Dow Jones Industrial Average.

It's one of those things that's easily repeated. It's reported at newscasts all the time, every evening news for decades. Most people would probably have recognized Dow Jones Industrial Average far more than the S&P 500. And it's one of the oldest indexes that's ever been created. It was actually first calculated back in 1896.

Been around for quite a while. Quick bit of history, the Dow Jones Industrial Average was named, it was first created by a man named Charles Dow, who was the co-founder of the Dow Jones & Company. He came up and started coming up with this idea of these indexes, and he created it together with one of his business associates, a statistician named Edward Jones.

And the point of it was to calculate how this basket of stocks would perform so that they could have a metric to judge the performance. The Dow Jones Industrial Average is not the oldest index, it's actually the second oldest index. The first index that the Dow Jones & Company came up with was the Dow Jones Transportation Average.

That was the first index that they created. And then they came up with this Dow Jones Industrial Average. Now, it was largely originally intended to be related and connected to heavy industry. Today, that's just kind of a historical misnomer because it does very little to do with heavy industry of any kind.

The index was originally created with 12 stocks in it, and today it has about 30. Here are the companies that are currently in the Dow Jones Industrial Average. 3M, American Express, Apple Computer, Boeing, Caterpillar, Chevron, Cisco Systems, Coca-Cola, DuPont, ExxonMobil, General Electric, Goldman Sachs, The Home Depot, IBM, Intel, Johnson & Johnson, JPMorgan Chase, McDonald's, Merck, Microsoft, Nike, Pfizer, Procter & Gamble, Travelers, United Health Group, United Technologies, Verizon, Visa, Walmart, and finally, Walt Disney.

Now, of course, you could see from those, Walt Disney is not a heavy industry company, neither is Walmart, Visa, Verizon, or practically most of these. So it's not an industrial average anymore. But the components of the Dow have been changed many times. A total of 51 times. But it's, you know, they've tried to keep the index reflective.

The company that's been in there the longest was General Electric. They started being listed in the index in 1907, and here in 2017, 110 years later, they still continue to be in there. But at different times, they've taken different companies in and out of the index. So there are many attributes to the Dow Jones Industrial Average that cause financial people and financially knowledgeable people to discount its importance.

But it's not to say it's unimportant. It just has some significant features that make it very troubling, or not the most useful. There are other indexes that are much more useful. Probably the biggest thing that you should be aware of in the Dow Jones Industrial Average is that it is what's called a price-weighted index.

This means that the most important factor in calculating the impact of the various up and down movements of the stocks of the companies that are used in calculating the Dow Jones Industrial Average is their price. Meaning price is measured in dollars per share. So if you have a stock that is $20 per share, and that moves up by one point from $20 to $21 per share, then that will move the Dow Jones Industrial Average up by one point.

If you have a stock that's $80 per share and it moves up from $1, from $80 to $81, that'll move the Dow Jones Industrial Average up by one point. Now, if it were all as simple as that, it's not, I'll get to that in just a moment, but if it were all as simple as that, you could immediately start to see some of the potential problems of this structure.

So pretend it's as simple as a dollar, for every dollar that the share price changes, that changes the average by one point. You can see here that you don't get any insight into how large any particular company is or how many shares of stock that a company has. See, you could have a company that has 10 shares of stock at $10 a piece, or you could have that same exact company could issue 20 shares of stock at $5 a piece, and the company would get exactly the same amount of revenue.

You as an investor could buy the same value of the shares, you just have a slightly different number. And there are different reasons why some companies will have stock prices that'll trade at lower dollars and some companies will have stock prices that'll trade at higher dollars. You famously have the share prices of something like a stock like Berkshire Hathaway, which is tens of thousands and now over $100,000, or you might have companies that are down on their, considered to be penny stocks that are super cheap.

So the share price can change dramatically, and it's not so much the actual share price that is important as the value of the company. But the value of the company, that's called the market capitalization, market cap, is not reflected in the price of the stock, nor is it reflected in the Dow Jones Industrial Average.

So you can also see here that if you have a company that is very strong, but is moving from $80 in value to $81 in value, that's a much smaller percentage move than a company that's $20 in value and moving from $20 to $21 in value. So this price weighting methodology has some substantial problems with it.

Now, before I go on, the Dow is not today, as simple, it's not the 30 companies and the price of their shares calculated out and multiplied out to equal the Dow Jones Industrial Average. What's happened over the years is that there are all kinds of changes that have had to be made to the index in order to keep it functioning.

When it was originally built with those 12 stocks, it was that simple. You just take the total price divided of all the stocks, divided by 12, and that would be the Dow Jones Industrial Average. But today, because of all of the stock splits and the spinoffs, and sometimes new stocks come in and new stocks go out, they have to consistently update the divisor, the number that is actually pulled in.

And the divisor is changed constantly. It's varied all over the place in terms of the price. It was, the divisor in 1928 was at 16.67 points, so you would take all the prices of the stocks of the 30 companies and multiply it up, divided by 16.67, and it's very, very low now.

I don't have the current one in front of me, but it's like 0.13 something, blah, blah, blah. It's published in the Wall Street Journal. So this number is what's calculated in to wind up being the 20,000 point number of the Dow Jones Industrial Average. But that price weighting thing is a real problem.

It means that companies don't necessarily have the influence that the size of the company would indicate. Here's just one example from a Bloomberg article from today that makes the point here. The Dow Jones Industrial Average has climbed about 13%, or 2,250 points, since the end of 2015. Its four best performers, all rising a similar amount, added about 1,000 points between them.

But look at the distribution of those points. A 30% gain in $309 billion JP Morgan, again, $309 billion JP Morgan, was only good enough for 136 points. I'm gonna read that again just in case you're driving down the road, pay attention to the numbers. A 30% gain in $309 billion JP Morgan was only good enough for 136 points, while $101 billion rival Goldman Sachs contributed 415 points with a 33% increase.

So Goldman Sachs, a company that's a third of the size, contributes 415 points with a similar increase in value as compared to JP Morgan. The best performer in the index, Caterpillar, rose 37% and contributed 172 points. Despite having a market capitalization of $55 billion. Size doesn't matter in the Dow.

That's a real problem. So it's a good example here just to show how big of a deal this is, which is why generally, financial advisors don't pay much attention to the Dow in their portfolios or anything, it's more of a historical thing, and the public likes it than just about anything else.

Here's another paragraph from that article. They said, "Want to get the Dow above $20,000? Example, time for an experiment. Let's take $153 billion Cisco, which has the lowest stock price in the Dow, and see what happens when it's replaced. Here's what the Dow would look like when a selection of worthy constituents, $18 billion Campbell Soup." So there's a chart, so I obviously had to read it to you.

"$18 billion Campbell Soup, $37 billion Emerson Electric, or even $10 billion Harley-Davidson are added. It takes all of those over at 20,000. So any one of those companies, you can swap out $153 billion Cisco, swap in $18 billion Campbell Soup, $37 billion Emerson Electric, or $10 billion Harley-Davidson, and boom, you're over 20,000.

Just don't replace it with $76 billion price line, 'cause that'll take all the fun out of Dow 30,000. You're immediately at Dow over 30,000 if you just swap in price line." So hopefully you get the idea. The point is that for actual analysis, it's not particularly useful. Now, does it matter?

Yes, it does matter. Probably the best thing about the Dow is just simply how old it is. Because the Dow is so old, you can go and you can take this consistent methodology and you can clearly chart the growth of the American economy, the growth of the companies that have been involved in the Dow.

It gives you a good indication of the direction of the value of the share prices of the companies. It's also important simply because it's always out there. It's always out there in the news. And it indicates the direction of the markets. So certainly the Standard & Poor's 500 and NASDAQ are much better indexes to watch.

But you'll see that these generally move together. And so the S&P 500 and NASDAQ are also at or near their own all-time highs. So the Dow is definitely an index that sends a signal. It's definitely something that people will notice. When it goes over 20,000, it will be news.

It'll be front page news. You'll see it in the news. You'll see it on the websites. You'll see it on social media, et cetera. You'll see people crowing about it. You'll see it as attributed to all kinds of people. President Obama's final victory of his administration. You'll see people moaning about it.

It's the signal of the end of the world as we know it. But you'll certainly see the 20,000 mark talked about. It is going to matter. So that's what the Dow is. And the answer to it is yes, it does matter. Now let's get more personal. Let's talk about what should the Dow at 20,000 mean to you and then what should you do about it in your own personal investments and your own personal financial life.

First, what should it mean to you? Well, it should mean in some ways very little to you because you should be watching your money, not other people's money. So yes, Dow Jones Industrial Average at 20,000 is a social signal. It's gonna play into the tenor around you and that does matter.

But the more important factor would be what's your personal index? What's your personal performance? How is your portfolio doing? Those are the numbers that matter because you can't spend the Dow Jones Industrial Average, but you can spend the money in your accounts. And so this should be a signal to you to stop and to look at your accounts and to see, well, how am I doing?

Am I at record highs? Is my portfolio at record highs? How's the performance of my portfolio? Perhaps pull up a chart of the Dow Jones Industrial Average performance and compare that to your performance and see how things rank up. That's what it should mean to you. It should be a signal.

Because beyond the fact that the Dow Jones Industrial Average simply has psychological effects on the population of the United States and the world and on stock traders, it doesn't mean anything to you. It doesn't affect your life. But your portfolio affects your life. Your portfolio is what you can actually spend.

Your portfolio is what will determine how wealthy or poor you wind up being in the future. You need to pay careful attention to the emotions that you feel. Many people will feel an emotion about, "Hey, I'm at Dow 20,000. "This is the top, this is the end. "It's all gonna go down from now." You need to handle that emotion.

Many people will feel the emotion of the opposite. "Dow was great. "Hey, the times are good. "Let me go ahead and put more money in." Both of these emotional reactions need to be tempered by careful analytical thinking and careful reevaluation of your goals. More on this in a moment, but the reason I chose these two sponsors for today's show is because they fit in so perfectly.

Again, Personal Capital, Paladin Registry. Personal Capital, what you should do about Dow 20,000 is go right over to your Personal Capital dashboard, which of course you'll download it first. Sign up for free at radicalpersonalfinance.com/personalcapital. Totally free. You'll go into Personal Capital and you'll do just like you do on other banking things.

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It's the same as anybody else. But their dashboard is beautiful and they've got great insights on investments. So that would be the first place that I would go is go over to my Personal Capital account, pull things open and take a look. And let's just review. Are my account balances at record numbers?

How's my net worth statement? We just finished up January 1, 2017. How much did your net worth grow in the last calendar year? All of these questions are questions that you can answer simply by using the Personal Capital, Personal Finance tools. That again, sign up for free, use my link.

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So you may or may not be able to find somebody that works with your personality, that you feel really gets you and gets your goals. But at least you can be confident that you're talking to people who are honest, who have ethical backgrounds, and who are knowledgeable in the personal finance and investing space.

So find a great financial advisor 'cause you should have, hey, if you got questions about Dow 20,000, you probably should have started there. Find a great financial advisor at radicalpersonalfinance.com/paladin, radicalpersonalfinance.com/P-A-L-A-D-I-N. Now, back to emotions. Anytime the markets hit highs and lows, you should carefully look at and think about and consider and analyze your personal emotions.

If you find yourself right now extremely nervous about your investments, you need to sit down and talk with your financial advisor about your nervousness. Are you nervous that the market's gonna fall apart? If so, pay attention to that. Because if you don't understand your nervousness and you don't pay attention to it, it'll be very easy for you to succumb to an emotional decision in the future.

Now, stock market investing may or may not be right for you and your portfolio may or may not be right for you. Not every, in my opinion, not everybody should own stocks. I don't buy the line that everybody should own stocks, everybody should own mutual funds. Guess what? There are lots of rich people in your town who got rich and never owned stocks.

And what many of them have learned is they simply didn't have the temperament to handle the ups and downs of the stock market. And so they wisely pointed their finger at the people who were in the stock market. They pointed their focus in a different direction. Now, obviously, I'm here to seek to educate you on what numbers mean, what stocks mean, et cetera.

Your financial advisor is there to educate you on what these things mean. But the point of it all is simply that you need to understand for yourself what's true and what's not and what works for you. Now, a couple of comments on kind of what's going on with Dow 20,000.

There are definitely some political winds that are blowing, in my opinion, definitely some political winds that are blowing the Dow. And we should pay attention to that. I think that with the election of Donald, President-elect Donald Trump, that changed the financial markets. And he certainly has been making many more overtures toward the world of finance, focusing heavily on pro-growth policies.

He's promised to be the greatest jobs president that, he said, "I'm gonna be the greatest jobs president "that God ever created." I think that's his quote. (laughs) I didn't know that God created jobs presidents. But who knows? Who knows, maybe he will be. But he's very, very focused on seeking to build up and grow jobs and to stimulate the economy.

Of course, you have to ask the question, and the libertarian free market guy in me wants to always ask, okay, what impact does the president actually have? But at the very least, the president makes a signal. And Wall Street has been thoroughly happy with the election of President-elect Trump in terms of the signals that he's sending.

There's also probably just the fact that you have a Republican majority in the House, you have a Republican majority in the Senate, and you have Republican presidents. That is a remarkable, well, it's a remarkable move. So what it means is that the Republicans, if they are able to work effectively together, will probably be able to pass more bills than past Congresses, where the Congress and the president, the legislative branch and the executive branch are at loggerheads with one another.

So time will tell. Certainly had an impact. Now, the question, of course, is do politics determine the direction of your portfolio? And this is the biggest thing that often frustrates me that when I read articles and analysis that people make is people often assume that the country is synonymous with the companies in the country.

So for example, the United States has extremely difficult financial problems in terms of large debts, and especially large debts that are not generally reported on the books, commonly called unfunded liabilities. You have problems, major problems, with Medicare, Medicaid, Social Security, accounts for 50% of the budget of the United States and just a massive financial boondoggle.

Totally underfunded, depending on the number that you use. You were talking hundreds of trillions of dollars. I use the number about $220 trillion. I cite Professor Kotlikoff from Boston University, but whatever, they're different estimates and who knows. This is not the current debt. This is not the current debt as expressed as a percentage of GDP.

It's just a significant problem. But the question is, is that problem solvable and does that problem have to be solved by the companies? I think this is one of the constant things that I see, that companies and countries are different entities. You can't look at those companies that are in the Dow Jones Industrial Average and think that the only influence on them in terms of their profits is just how the American economy performs or what the American government does.

You have Apple Corporation and Boeing Corporation, Coca-Cola. Are these companies entirely reliant on what the US government does or doesn't do or the financial fiscal problems of the US government? No, they have massive global enterprises, huge, massive global enterprises. And so thus, you always have to dig down a little bit deeper and say, how does my company work?

Where does the revenues come from for my company? What are the factors that are gonna influence my profits at the end of the year? That's the type of analysis that will make a difference. No question, the President of the United States will have an impact on the company. And these poor companies that get called out and President-elect Trump's tweets or in his speeches this afternoon, he recorded his press conference and he started talking about pharmaceutical companies and all the pharma stocks went down or Boeing got hammered and their stock got hammered because he got called out on the new Air Force One project.

So certainly these companies are affected, but these are blips. These are small blips on the radar screen in terms of the actual performance of the company. So always remember, companies and countries are not the same thing. Second, always remember, companies have the ability to change. Some quickly, some slowly, but companies have the ability to change.

Companies, even including the large ones, though they face many problems with massive bureaucracy, they face many advantages due to their size and they can change. And they're staffed by smart men and women who are looking at all the same information that you are and seeking to understand how do we gain more customers, how do we build more profits, and how do we make sure that we return profits to our owners?

That's what they're doing. And they can change. They can change from the top to the bottom. They can change all kinds of things. Now, obviously, they're not all gonna change for the better. Sometimes they're gonna make mistakes, but they can change. And companies can change and adapt their business model to face a changing world.

So important to always keep that in mind. No matter what the laws do, no matter what legal changes come about, no matter what the Federal Reserve Board does, a company has the ability to change, change its operations. Yeah, I had an interesting experience thinking about it. There's a lot of fuss in the previous election cycle about the potential changes of minimum wage laws.

And long-time listeners of the show know I'm emphatically opposed to minimum wage laws. I think they're discriminatory, and they hurt workers. They do nothing but drive down employment, and they hurt the people who can afford to be the least hurt. Minimum wage laws hurt the poor. They hurt the uneducated.

They hurt many of the young. And so they're a terrible idea, in my opinion. That comes from a profoundly deep free market conviction, and the profound belief in the ability of two individuals to come together and strike whatever voluntary contract they wanna strike with one another. But that's a politically unpopular opinion.

It's politically popular to say, well, we need to pay a working wage. Well, who knows? Who knows if I'm right? Who knows if other people are right? But there was a lot of hullabaloo about a minimum wage and raising the minimum wage. Well, I've predicted for a long time and have observed that if you lobby for a higher minimum wage, all you're lobbying for is your employer to work harder on finding a cheaper replacement for you.

So you'd better be careful. And one of the biggest changes that I have seen is many of the minimum wage type jobs, especially service-related jobs, are in jeopardy. This has happened slowly. But cashier services, for example. In the beginning, when self-checkout lanes first came open, they were a little bit frustrating to use.

They didn't work all that well. And so many people chose to go and work with the cashier. So stores came out with just one or two lanes. But I have observed that more and more, self-checkout lanes are much more popular. I personally often use the self-checkout lane 'cause it moves quickly.

I can move quickly as long as people in front of me are working, the payment systems are working faster. Just the whole process has been streamlined. There is a lot of fuss in the fast food working industry about the minimum wage. And I predicted for several years that the fast food industry would replace the frontline workers with a computerized system.

And there may be different applications of this. You can see this happening with ordering on an app on your phone. The technology is completely perfectly there where a company can use a geolocation on your phone with your restaurant's application. You can pay, you can do it all right through the payment systems on the phone.

You can just pick up, walk in, put the order on your phone and you walk in and pick up the bag. Or you can use the kiosk. Well, for the first time this last two weeks ago when I was on vacation, I was up in Georgia, and I saw for the first time a McDonald's that had kiosks, ordering kiosks, where instead of going up to the counter and giving your order to the person behind the counter, you could just simply punch the info in the computer.

Same thing is coming. So that's gonna come and it's gonna spread and be the majority of the ordering systems in the future, in my opinion. Who knows? Again, I could be wrong, but that's my prediction. Because I would probably rather deal with a kiosk than deal with a person, especially a person who doesn't bring any value and who winds up being more frustrated, frustrating to interact with because of poor customer service, at least with a computer I know what I'm gonna get.

So that represents, my point is that that represents an indication, a current trend that you can watch and see in your own experience of how companies will adapt and will change based upon legislation and based upon economic environment. If wages were, if a company could pay $2 an hour to a worker to take orders, they would have almost no incentive to bring on computers, my guess, I haven't researched all of their books.

But there is a point, however, at which the labor costs become so high and then the person is replaced by a computer. So companies have the ability to make that change. That's very different than governments. Friend of mine, longtime political reporter and has talked about a lot about Washington and just tells me some of the stories and the rules and things that are in place on federal workers and the federal government.

It's almost impossible to get rid of people. Well, companies will work their way through that. So don't associate governments and companies too tightly. Yes, they influence each other. Yes, they both matter, but they are not synonymous. They're simply not. Now, what should you do about Dow 20,000? Anytime you listen to information, anytime you listen to things, you should always ask, what's my action?

What's the next action? Do I need to do something with this? So that should be what you're thinking. What do you need to do about Dow 20,000? If you take in an information like, hey, the Dow's at 20,000 and it doesn't affect you, then don't worry about it. If it's outside of your, something that you can affect or change or should change and affect, don't worry about it.

Just move on with your day. Focus on something that is important to you. What should you do? Well, sit, look at your investments, see how they're doing. If your financial plan dictates that you should be making changes, you might take advantage of market highs as an opportunity to sell.

But that should be driven by your financial plan, not just based upon, hey, I'm nervous about something. We'll get to the investment plan in a moment. Your financial plan is how your money actually integrates in your life. Your financial plan is what drives your personal decisions. Were you investing for retirement?

Is that retirement 30 years from now? Well, if that retirement is 30 years from now, then Dow at 20,000 is not gonna be influential in your personal decisions. Now, are you planning to retire two years from now? Well, Dow at 20,000 might be an indicator that it's time to go ahead and start taking some cash out to start funding the first few years of retirement.

If you were planning to buy a house, Dow at 20,000 might be an indicator of a high market, so it's a good time to go ahead and sell. Or you were thinking about starting a business. Well, if you're thinking about starting a business, you might say, I need to move my money to cash, so Dow at 20,000 would be a good time to do that.

That's what I've done in the past. If you decide that you're gonna sell, like for me, I was starting a business, decided I didn't wanna own stocks anymore, wait for a high time to do it. This might be the time to do that. But that needs to be driven by your financial plan.

The plan that involves your financial decisions and your personal goals. Now, what about your investment plan? Should you change your investment plan because of the Dow at 20,000? Well, if your written investment plan has in it a sell indicator of if the Dow hits 20,000, then sell, then yes, you should change something.

But I guarantee that not a single one of your investment plans has that as an indication. So, short answer is no, you should not change anything. You don't change midstream in your investment plan unless something has materially changed. In your life, your financial plan has changed, your life goals have changed, or you've decided to change your strategy, but you don't change just because you have a certain indication.

You follow the pre-planned, pre-thought-out investment plan. A majority of you don't have a written investment plan, so what do you do? Well, you keep doing what you're doing until you decide to change to a different strategy. Yeah, there are a few of you who are traders in the market, but you're not listening to this with the perspective of changing.

Dow 20,000 is just, you're already taking that information in. The majority of you who own stocks own them in the context of a mutual fund. And those mutual funds are either actively managed or they're passive index funds. If your mutual funds are actively managed, then by definition, you have chosen to hire a fund manager to manage your money for you, and you're paying that fund manager to choose the companies that they need to invest in.

So trust the fund manager to do their job. That's the investment plan that you've chosen. If you own a mutual fund that's investing, one of my favorite mutual funds, I always loved it, Investment Company of America with American Funds. They had the best brochure. I just, I love that American success story of the classic mutual fund with, what, 80 years of history.

I always loved that fund. And they had the best brochure that was just so fun to read. Always was a favorite of mine. I'm not saying it's good, bad. I'm not giving a buy recommendation. I just thought it was a neat mutual fund. So if you have your money in the Investment Company of America with American Funds, you've hired the fund managers to make these investment decisions for you.

They're gonna invest in the best companies of America, and they're gonna try to do so in an intelligent way. So Dow at 20,000 is information that they're taking in. They're taking in that information. They're seeking to make intelligent financial decisions, investment decisions because of it. They might be looking down and saying, "Hey, Home Depot is doing well.

"Walmart's doing well. "We think we have these other companies "that are gonna be doing better. "Let's take some profit from Home Depot and Walmart "and buy these other companies." But the point is, that's not you. That's your fund manager. That's what you signed up for. Now, if something in your personal life has changed, then you would sell at Dow 20,000.

But if nothing in your personal life has changed such that you're not gonna need the money, don't change because of market indicators. And I'll give you the same speech at the bottom of the market. Just happens to be that this is the top version. Now, if you're an indexer, okay, well, you have index funds.

You don't have an investment manager who is choosing companies. But what are you committed to? You are committed in an indexing strategy to the overall growth of these companies, and you're committed to the fact that you can't guess which ones are gonna do better than others, so you're just gonna own all of them.

So is there anything about the news of Dow at 20,000 that will cause you to change? There's nothing. Unless something has changed in your personal life, in your personal plans, you wouldn't change your investment strategy just because of Dow 20,000. Because to do so would mean that you are sacrificing your strategy.

You're not following it. Now, it's okay to change your strategy. Let's say you're changing your investment strategy. You can do that. But that would be because something has changed outside of Dow 20,000, and now you're just using an opportune time to go ahead and sell. I hope, I know this is simplistic, and there are a few of you who are pursuing your own unique trading strategies and things like that.

Obviously, this isn't relevant to you. But to the vast majority of you, I just summed up all of your investment strategies. You've either hired a mutual fund manager to manage your money within mutual funds, or you've chosen to hire a passive indexing company to hold your money in, and you don't change your strategy because of Dow 20,000.

Might be a good time to rebalance, I guess. Article here that I may be covering in the future talks about, titled for this last week, portfolio rebalancing might be overrated. We may talk about that on a news roundup, we'll see. But might be a good time to rebalance. Might be a good time to take some money.

It's always fun to take money out of a portfolio and spend it if you wanna take a big cruise or something. But don't make quick decisions because of things out there that aren't really related to you, and aren't really related to your specific actions and to your goals. Dow 20,000 is meaningful because of the buzz that it will put in the market.

And then also because it's reflective of other indexes. But the index itself is not particularly useful for analysis, it's really not. It's kind of just an old fashioned, fun thing to keep an eye on because it has such a history. And it's not useful to your life. So, don't worry about it.

Notice it, enjoy it. It's good to enjoy when the market goes up, as long as you're not gonna get too depressed when it goes down, 'cause it'll go down. Time will tell when, we don't know when, we don't know how much. But just remember, one out of three years, the market's gonna be down a third.

Every year it's gonna wander around, I don't know, 15%, 14%, 15%. It's gonna wander up, it's gonna wander down. Probably in the next couple decades, it's gonna go down by 50%. So you should be ready for that. That's what you signed up for when you signed up to invest in stocks.

If you don't like it, get out. Your financial advisor should have told you to get out. Or educate yourself until you like it. Anyway, that's it, thank you all so much. Oh, oh, oh, as we go here, one quick thing. I need a huge favor from you guys. Web address, I wasn't prepared.

You can enjoy the music for about 10 seconds. (upbeat music) (upbeat music) All right. (upbeat music) I'm just gonna make a link, okay. I'm doing a survey. With new advertising, I need to, if you'd be willing to help me, I need to get a little bit of demographic information.

So I'm doing a very quick demographic survey. I'm working on selling a lot more advertising on Radical Personal Finance. I'm doing, again, a demographic survey. If you could do me a favor, please. If you just have about 15 seconds, personal favor would mean helpful to me. I need a statistically representative sample of you, of all of you to respond.

So that means I need at least several hundred of you to respond. If you could please go to radicalpersonalfinance.com/survey. Radicalpersonalfinance.com/survey. That'll just jump you straight in. It's just a quick, simple, about a five question demographic survey. So please, radicalpersonalfinance.com/survey. Radicalpersonalfinance.com/survey. Did I say it enough times? Send the show notes, radicalpersonalfinance.com/survey.

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