What have the following dates got in common; 3rd, 4th 5th, 6th 10th, 12th, 13th, 16th, 18th, 20th 24th and last night the 25th October? Answer: each of these days saw the Dow Jones Industrial average close at a new all time high.
The index now stands at more than 400 points above the high set on January 14th 2000, which until the beginning of this month was the highest closing level ever recorded.
It’s a staggering performance by the Dow, especially in view of the expected economic slowdown in the US.
It’s been helped along by the falling price of oil, and by a growing consensus that the US slowdown will not be as bad as originally feared - although frankly, these more optimistic sentiments are still quite debatable.
But investors who fear the market is overheating should bear this in mind. Company valuation in proportion to profits projections are much lower today than back in 2000, when markets crashed. In fact company valuations relative to forward profit projections are at a ratio of just 15, compared to typical ‘PEs’ of 25 back in 2000.
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