Keep the Dow in perspective

Updated 1/29/2018 5:01 PM

Once again our ne'er-do-well president had thumped his chest about how well the stock market is doing (never mind the seven years of climbing before he took office). So what? The stock market has no immediate effect for the typical shareholder. So what if your 401(k) has gone up (or down)? It is of no value to you until you begin to withdraw money which may be decades from now. In fact, when you put money into your 401(k), that money is gone from the economy for 20, 30, 40 or more years.

The basic premise of the stock market is for a seller to get rid of a stock to some idiot that doesn't realize the stock is going down. On the other hand, the buyer is acquiring a stock from some idiot who doesn't realize that the stock is going to climb much higher. The problem is that one of them is right. But in truth, the broker handling the transaction doesn't much care either way. He gets money coming and going. It's nice to have a 401(k) but your standard of living is determined by your paycheck.

On a down-to-earth basis, the only number that matters to your immediate life is the pay rate that shows up on your pay stub. You can't spend a 100-point Dow rise at the grocery store. Conversely, the grocer isn't going to demand more money when the Dow goes down 100 points.

James Prescott


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