Yeah, he's been SO bad for the economy.

When the Dow fell 5000 points in 2007-08 it was telling us the patient was seriously ill.

Investments like people's 401k funds, college funds, pension plans, etcetera. The other indicators of the economy are similarly working their way toward improvement, like the unemployment numbers which are also the best they've been since Obama took office.

You are correct that the DOW is not "the economy" ... but it is an important indicator.

It provides an indication of expectations regarding future economic activity.

When the DOW collapsed in 2008, it was viewed as one of the most important indicators of the financial mess.

Importantly, the fact that the DOW is currently UP about 5000 points since Obama took office, and almost DOUBLE its low point in March of 2009, puts the lie to the GOP claim that Obama is bad for business.

Now ... here on DU, its common that when the DOW goes DOWN ... that is often used to claim that the economy is failing, or that we're minutes away from a double dip. That phenomenon could be seen here during each summer that Obama has been President.

When the DOW goes down, the double dip is about to happen ... when it goes up ... its irrelevant.

Point out one person that said the Dow Jones is the economy

I fucking dare you

Could I be abjuring better gains ahead? Possibly. But I went heavily (for me that is - a decidely middle class investor who does not have seven figures lying around) into sp500 index funds a couple months ago and have seen 11%+ gains there. I've seen far better on one particular individual stock currently 27% up in the same time frame but somewhat ironically I bought that as a stable mid/high-dividend income investment (pays about 4.5% interest) not as a buy-and-sell so may have to think about what that's really for before I sell that one.

If I time it wrongly and could have sold for 15 or even 20% gains in the next few weeks why should I care? The gains I have are enough, and people are getting confident in equities again. That means it's time to sell the gain-focused investments at least.

From 2000 to 2008 (Bush years) ... the DOW basically stayed in a range between about 10k and 13k, and generally towards the middle of that.

However, back then, when it spiked past 13k ... it seemed to do so too fast and for little reason. I took some gains then, although I wish I took more. It made it to 14k, and then crashed FAST. I took more gains until it hit about 10.5k ... then rest I left believing that the crash, like the bubble was exaggerated.

When it got down to 7500 (Jan 2009) a friend and I were talking and he had a great idea. He had decided to accelerate his 401k contributions so they would max out by around April (he and his wife have no kids, and plenty of extra money). He figured that the market would come back, and so this was a great time to buy back in.

I accelerated my 401k (not nearly as much as he had) and I also started to bring cash back in, but slowly. The DOW was back above 10k in less than a year, occassionally dipping under that level, but as things have played out ... we again started to run in that 10 - 12k range.

If found that increasing my cash position when the market passes certain markers, like 11.5k, 12k, 12.5k ... and then moving cash back in when the market drops down through those ... I've made extra money just on the "market movement".

So like you, I've also moved a little more money to cash or cash like investments, but I also think the economy is improving, and so I might move some of that to other investment types beside equities, but I'm keeping a fair amount there, and will "back out" some cash if there if downward movement to lock in gains, even if they are smaller than those I could take now. Kind of hedging my bets I suppose.

What I desctibed above is with what is essentially my "savings". Why people accept 1% from banks when blue chip companies are offering 4-6 on preferred stock or even stable common stock I have no idea, so principally I'm a safe dividend chaser with about 20% that I use essentially as described - timing market movements not to peaks and troughs (I'm not that good) bit for lows and highs within predictable variation.

I confess I'm about as passive a 401k customer as I can be. Straight dollar cost averaging into a broad diversified set of funds that I rebalance every couple of years.

Boring works in the long run, is my motto there.

Much of what I described there is actually how I manage my 401k. And so when I say "cash" in that context, I really mean something like a money market fund which has a very low interest rate, but that won't lose value no matter what happens. Its like the "cash" part of my 401k.

And I also kind of do the dollar cost averaging approach in the 401k, although I have at times accelerated it, like back in 2009, and then re-spread so that its an even amount each month ... that's what I'm doing now. And so the "management" I do in my 401k is that at times, I take gains and move them to that money market fund, so that I can protect the gains, and then also move them back in if I think the market has dropped lower than it should.

My "savings" is divided into actual cash savings, and a couple CDs (which I tend to roll over from time to time) ... these I try to keep at a level at which I could survive 3-6 months of zero income if I had to.

And then I have a small number of specific stocks. And those are only in industries in which I feel like I have enough knowledge to make reasoned decisions.

I like your phrase "predicable variation" ... because my 401k is the long term investment set, its the one I manage a little more closely. Not daily, but anytime I do bills, I check it. And if the market goes up or down by about 500 points in a few days, I also check. I don't take big risks, but I do try to pay attention to "predictable variation".

Anyway ... good luck!!

Corporate Media spin this? The Donald will probably claim credit for this too...
SG