Dow Tops All-Time High. Significant?

So, today the Dow Jones Industrial Average hit an all-time ("Dow Tops All-Time High," WSJ 10/3/06) of 11727, bursting past the old mark of 11723 (1/14/2000). My reaction is "so what?" It's interesting how we humans put significance on insignificant numbers. The Dow high is just another number. It's information. But, what are investors supposed to do with that information? My answer, contrary to the many other advisors and pundits running about with this useless bit of trivia, is that investors should do absolutely nothing. That's right. Nothing.

You see, the world didn't change from yesterday to today as we all waited breathlessly for this incredible threshold to be passed. The truth yesterday, today, and forever is still the same. And, that truth is that investors should be diversified and not speculate in any narrow sector or index.

The Russell 2000 (index of small company stocks) also hit an all-time high this year. In May 2006 (somewhere around May 1st) this index topped 785. Where was the fanfare, balloons, cut the cake, write it up in the journals? Didn't happen. Why? Don't know, except too many investors (and, their enablers) seem enamored with large company stocks 24/7. It must the familiarity of these companies. We fly on their planes, drive their cars, buy their toasters, eat their burgers, and take their medicine. So, why not buy them? OK, but spread it out. There are more than 5,000 publicly traded companies in the U.S. and many more than that overseas.

Is the Dow too high? Over-priced? Don't know. Ask me again in 2015.