The Dow Jones Industrial Average Closes Above 16,000 For First Time Ever…Yawn…Snooze

Today, November 21, 2013 the Dow Jones Industrial Average (DJIA) closed at 16,009.99. Is it time to party like it’s 1999? Not really.

I don’t know where the broader market goes from here, and neither does anyone else. However, I don’t predicate my success on my ability to predict the future. Rather, my success hinges on my ability to save more than half of my net income on a regular basis, buy high quality companies at reasonably attractive valuations with the excess capital derived from my savings and then monitor the portfolio with some regularity. Boring, right? Yep. But boring is good.

One of the more appropriate tools I’ve yet run across to value the broader market is the Shiller P/E Ratio. The Shiller P/E, developed by Yale economist Robert Shiller, is an inflation-adjusted average of the last 10 years of earnings. Right now, the Shiller P/E stands at 25.28 – well above the long-term mean of 16.5. Therefore, on that basis long-term equity returns from here are likely to be lower than long-term averages. But who knows, really? Certainly not I.

What do I know? I know to focus on what you can control. 

You can’t control what the stock market does. You can’t control when the Federal Reserve finally decides to taper QE. You can’t control what happens in China, or Washington D.C. You can’t control the inflation rate, the unemployment rate or exchange rates. You can’t control when and where war breaks out, the price of oil or the weather.

However, you can control how and where you spend your capital. You can control your expenses to a degree, and therefore your own debt levels. You can choose to invest only in high quality companies with long histories of operational excellence bearing strong track records of rising revenue, earnings and dividends. You can control the reinvestment of your dividends back into these high quality companies. You can choose to ignore the noise and stick to your long-term goals one day at a time. You can choose not to be a slave to the 24-hour newscasts that pervade your life. You can control your inner fear and greed if you really want to.

I believe in financial independence, and I believe it’s attainable for most everyone that aims for it. I believe in staying persistent though the peaks and valleys in life. I believe in perspective and being grateful for what you already have in life.

But what does all of this mean? 

It means to ignore the headlines. Stay focused on the long term. Yes, the DJIA is breaking records. But what does that have to do with The Coca-Cola Company’s (KO) ability to continue selling Coke Zero, Dasani or Simply Orange? Does the DJIA at 16,000 or 12,000 have an impact on Johnson & Johnson’s (JNJ) marketing and sales of Listerine or Benadryl?

Focus on what matters – companies and their performance. Value companies on a fundamental quantitative and subjective qualitative basis, using future cash flow or dividends discounted back to today to arrive at a reasonable valuation and make your purchasing decisions from there. Focus on high quality. Focus on the likelihood of a company being able to continue doing business for decades to come. Inspect and monitor cash flow statements, balance sheets, income statements, annual reports and 10-K’s, not the latest headlines on yield curves, quantitative easing or gold prices. Think about what the common stock prices on the companies you’re interested in or already own will be 10, 20 or 30 years from now. Does it matter if McDonald’s Corporation (MCD) shares fall from $99 per share to $97 per share today on weak same-store sales growth if MCD is priced at $400 per share 20 years from now?

Yes, the DJIA closed at a record-breaking number today. But I barely noticed because I’m too busy focusing on the things that matter: living below my means and investing in high quality companies for the long term. The financially independent me of 10 years from now will be glad I’m focusing on the things I can control and the things that matter.

How about you? Focusing on what you can control?

Full Disclosure: Long KO, JNJ, MCD

Thanks for reading.

Photo Credit: Idea go/


  1. says

    Couldn’t have said it better myself Jason. Limit your spending and financial mistakes, focus on your income and wealth creation, and you will end up successful on reaching financial independence. For me, this means keeping my head down, busting my tail at work, focusing on my various income generating projects and investments, and setting myself up for future success by making wise financial decisions on a daily basis.

    *sips Coke Zero*

    *counts November dividends and peer to peer lending interest received*

    • says


      Ha! I’m all about counting those dividends too. :)

      I agree that focusing on the projects that can generate the most wealth for you is going to be the most beneficial way to spend your time. Spending your finite attention and time on things you can’t control isn’t helpful at all. It just clouds your mind and detracts from the things that matter.

      Best wishes!

    • says


      I’ve also been buying just like usual here. However, I’ve been ever more cautious. Finding value becomes more and more difficult as the broader market continues to rise – taking most stocks with it.

      Simply because I know not where things go from here I stick to my long-term game plan. Like I’ve written before, now might be a good time to deploy capital at less prodigious rates, however.

      Good luck out there! :)

      Take care.

  2. says

    Party like it’s 1999! Wooooo!!!

    I hear you. Bear markets are definitely more fun for the value investor. There have been times that I wanted to invest some capital into the market this year, but it’s just one of those years… it’s harder to find value, and the markets hitting all time highs doesn’t excite me very much either.

    2012 was a lot more fun! Fiscal cliff scare, rock bottom interest rates, etc.

    • says

      FI Fighter,

      2012 was definitely a lot of fun. It was great to see those alternating swoons and shocks. It probably gave some traders and investors heartburn, but I simply kept on rolling every single month.

      Let’s hope we that elusive pullback everyone has been talking about and wishing for. I wouldn’t mind some cheaper stocks at all.

      Best regards.

    • says


      I’d love to buy PM here, but it’s already my second largest holding. I’m quite comfortable with my allocation here, and it’s still trading higher than my cost basis by a large margin.

      However, if things were different and I was either not exposed to PM or lightly exposed I’d be a buyer all the way. PM should be a long-term winner. And we still have China as this potentially huge catalyst in the wings. You never know.

      Have fun shopping. :)


  3. European says

    Thanks, Mr. Market! Picked up some PM yesterday. In 20 years from now, I will be happy to have had the guts to buy during an ATH period and that I stayed the course through the numerous correction(s).

  4. NickD says

    One can of Coke is 140 calories and one pound of fat is 3500 calories if you drink 1 can of coke a day that is 980 calories a week pretty much if you stop drinking one Coke a day in a month you lose 1LB.

    • says


      Hmm, I’m not sure how that’s relevant. However, I did recently significantly cut my cola intake and have lost some decent weight. I’m now below my target weight for the year by a wide margin after drinking more Propel and less Pepsi. :)

      Best wishes.

  5. Anonymous says

    I’m going to play devils advocate a bit, even though I am hoping Mantra, his followers, the other recent dividend blogger sites popping up, as well as myself all do well in our investments. We all want to buy low and sell high, but I notice how these sites have all been post 2009 where the markets have soared. How many of your readers, honestly had the guts to reach out when the financial markets were collapsing, and buy KO when it dropped from 32 to 18, or JNJ from 72 to 46. These are just a couple examples, and I don’t say it to be sarcastic at all, just that it is easy to be smug & say I am looking forward to a ” dip” to buy that stock I have been following, but sometimes easier said than done. Out of the 4 dividend sites I read, including this one, the total value of the portfolio’s are in the 100K to 200K range, meaning that either you are a fairly young investor, or you started late. I ask you, and your readers to be honest & imagine. Even though I know I am buying quality dividend stocks, could I pull the trigger to buy more if my portfolio dropped 50% or more and am watching large established companies like AIG, Merrill Lynch, Bear Stearns, Leman Bros collapse. Like I said, I am playing devils advocate, because I am also a dividend investor, but many of the readers or the blogger himself, have never really been put to the test. I have, and admit I froze & sold a bit, but certainly didn’t buy at the bottom, like so many pretend to have done.

    • says

      Great point, and valid as well. Taming the internal panic and continuing to invest is very difficult, but necessary for all those who envision being able to retire comfortably. As for the online DG community, I believe there will be some fallout during a collapse, but for the most part many DG investors are fairly convicted and would continue to invest, in both the good and bad times.

    • says


      Good post and looks like it created a good discussion with the posts below. I stayed invested thoughout the 2008, 2009 downturn and can say it was an absolutely gut wrenching experience. I think my portfolio went from around $200k to around $100k at the bottom. I did buy some (and obvioulsy had great gains on those buys) but had limited dry powder. Its one of the reasons I hold alot of cash now. Dont want to be in the same position during a dramatic market turndown with no capital to invest. Thats where millionaires are made in the stock market.

    • says


      I can’t honestly say how I’d react to the type of calamity that occurred a few years ago because, unfortunately, I didn’t have the capital or motivation necessary to change my life. However, I started not long thereafter and it’s not exactly like investing in stocks in early 2010 was vogue.

      But one thing I will say is this: I’m glad this blog is live and in the now. It documents all of my victories and losses in real-time. So what that means is that if we do experience another significant broader market correction you can log on to this site and see exactly how I respond. I can’t say that for many others.

      Furthermore, I think my track record of buying on big dips speaks for itself. I’ve purchased individual equities after significant pullbacks quite a few times, with DLR being my most recent and obvious example.

      Again, I can’t tell you for sure how I’d respond to a 40% correction because I haven’t lived through one. However, I’d like to think that with the solid base of experience I’ve built thus far that I’d respond in a manner that I consistently preach and write about. We’ll see.

      Best wishes.

    • says


      I can’t disagree with your thought process here. I still like to purchase on a regular basis because I honestly don’t know where stocks are going. However, deploying capital at lower rates and making purchases less frequent or smaller in size might not be a bad idea. That way you’re still adding fresh snow to the compounding snowball, but also building cash on the side in case a significant pullback affords us plenty of opportunities. That’s a best-of-both-worlds approach.

      Best regards!

    • Anonymous says

      I have been in the markets since 1986 and have seen a few ‘interesting’ days/months/years (Oct 1987 – “Black Monday” – was my first). I totally agree with the idea that you don’t know how you will react until your portfolio goes through a correction. Thank you Anon for bringing up this point. Everyone loves a hot market. But remember, the real the price of a stock is equal to what someone else will pay for it not what the fundamentals tell you…. And, your portfolio is just a bunch of numbers until you have the cold hard cash in your bank account. (Yes, I am cynical but at the same time optimistic. I have to be since I retired at 45 in 2003 and am totally living on my investments.)

    • says


      Great point on the portfolio just being some numbers until it’s time to sell and get your cold, hard cash. Of course, even money in the bank is just numbers on a screen until you have it in your hand.

      I’ve not been witness to a major market correction whilst having major capital invested. We’ll see how I respond. I’m actually looking forward to an event like that both to see how I respond (as a test) and to hopefully see better buying opportunities. Of course, if I need to raise capital for any reason this would not be a welcome event. We’ll see how it goes!

      Good luck out there.

      Best wishes.

  6. Anonymous says

    Sounds a little bit like seller’s remorse from the previous poster. I thank you for playing devil’s advocate because too much optimism can create complacence. Just because investments are in the 100-200K range doesn’t necessarily mean they started late or are fairly young. Dividend Mantra will be first to admit he has been a benefactor of major tailwinds in the economy since starting early 2010. However, as shown in his DLR investment, he will back up the truck when prices drop 25% or more as most investors would just play wait and see.

    The only real way to know is to live through bear markets such as yourself and see if your strategy and willpower can be battle tested against the tough times.

    Best Wishes


    • Anonymous says

      No sellers remorse at all Matt, as I am still fully invested and have a high 6 figure portfolio so, I didn’t get permanently shell shocked…lol. But you are correct in why I wrote what I wrote, to advise against too much optimism, because the markets are not a one way street up. As for backing up the truck when prices drop 25% or more, well lets wait & see shall we. Talk is easy. You need contrarian thinking to do it, the will power to actually commit your hard earned money at a time when things are at their worst, and you actually need the additional funds to put in it. If you are committing new money every week when the markets are at all time highs, where is this truckload of new money going to come from if the markets dropped 25% next week? I hope I am coming off as a flashing caution sign rather than pessimistic or cynical, because as you say, I have been through several bear markets.

    • says

      I am going to response because me and DM somehow have almost identical entry point on DLR. You mention how JNJ dropped from 72-46 and question whether some of us would buy. funny you use those numbers because DLR has dropped very similarly from 74-46. My most recent purchase was at 48. I think it goes without saying that JNJ is significantly more safe and stable than DLR. So if DM and myself are comfortable with that, we would be doing back flips all the way down to the bank should we get a company like JNJ to do a similar drop DLR has done.

      I will be quite honest with you, I have zero intention or thought to sell DLR, my only thought is whether I should add even more than I already have. However, what is difficult for me is the opposite, not selling stocks that I own that have soared 30, 40 even 50% this year is proving very difficult for me to do.

    • Zol says

      “Out of the 4 dividend sites I read, including this one, the total value of the portfolio’s are in the 100K to 200K range, meaning that either you are a fairly young investor, or you started late.”

      “as I am still fully invested and have a high 6 figure portfolio so”

      You Mr Anon. Saying i “lived through multiple bear markets this is what to watch out for” is valuable information to provide to a very transparent and truthful blog and blog following. Doing a portfolio size compare for a long term investing strategy… sigh.

    • Anonymous says

      Sorry you took the wording out of context. I am not, repeat not, comparing portfolio size as I am 25 yrs older, and have stocks, bonds, reits & index funds as opposed to straight dividend stocks. I am also not telling you what to watch out for as I cannot predict the next bear market anymore than you can. You can read into it what you like, but as I suggested early, I am only playing devils advocate a bit to stir up conversation on investing, and by saying long term investing will hit some bumps in the road, and occasionally the road will collapse. I’m glad you participated in the conversation, even if you missed the point.

    • says


      Great comment thread here.

      I agree that it’s easy to be singing the praises of the stock market and thinking that one is a genius investor when the market is breaking new records. However, the exact point of the article is to not focus on absolutes like this. It’s to stay focused on what you can control. Certainly one thing you can control is how much cash you hold aside for large pullbacks. Some investors feel comfortable with larger cash positions, some feel better knowing that most of their cash is working hard for them.

      I’m just confused because this article was not recommending to just keep throwing cash into the market. Rather, I pointed out that based on the current Shiller P/E being so high above the norm that equity returns from here are likely limited. However, that’s not to say that individual opportunities cannot be found.

      As far as what will happen in a major pullback I’ll continue doing what I’ve always done. I’ll keep deploying available capital into the most attractively valued opportunities I can find based on portfolio needs and capital availability.

      I wouldn’t disagree that investors might not be best served deploying capital at slower rates today. In fact, I’ve been writing about my cautious feelings for months now.

      Best wishes!

  7. says

    Boring ist good – correct!
    Trading (intradaytrading with futures) is not boring – but life-threatening 😉

    You can not move the market – forget it!
    You can only buy very good companies, collect the dividends (therefore my name 😉 ) and stay extremly cool, if the market turn down or start to crashing…


    • says


      Boring is indeed fun in the right circumstances. And I’d say investing is one of the greatest possible examples of this.

      And you’re right: you can’t control the market. So instead of focusing on that, focus on buying high quality companies at attractive values. That’s the true path to less headaches and more money. :)


  8. Anonymous says

    I agree with anonymous blogger. It’s very risky to be buying any stocks when the market is pushing all-time highs and valuations in general are stretched. But in Dividend Mantra’s defense I thought the purchase of RDS-B was a good example of buying good value regardless of a frothy market. In general, I think the best course of action right now would be to raise cash and wait for the next bear market. It’s due fairly soon.

    • says


      I continue buying because we really don’t know how long the market will stay elevated and valuations will stay stretched. The likelihood of a pullback is fairly high here, and if it happens then I’ll deploy my capital at more advantageous prices. Trying to time the market is a fool’s errand, but I don’t disagree with saving up a little cash here. The problem then becomes how much cash is enough? What if a pullback doesn’t come? What if it comes before you’re done saving the cash you want to? I’m a long-term investor so I continue to invest for the long haul here. I average my way in every single month and in doing so I’ll likely catch both tops and bottoms. If I could predict the future I’d catch more bottoms than tops, but I can’t so I don’t worry.

      Best regards.

  9. Anonymous says

    I am staying in my Roth IRA and Brokerage individual divvy stock holdings, but I am transferring my 401k funds holdings in my to cash. There will be a pullback.

  10. Anonymous says

    Say what you want, I like bull markets. Even though I’m a dividend investor; seeing my brokerage account getting larger and larger is wonderful. It makes people feel more wealthy and inturn they go out and spend more which inturn helps the economy. I’m retired and have been through a few bear markets, believe me bull is better.

    Bill from Wmsport

    • Anonymous says

      Agree, bull beats bear for fun anytime, but we all wish it was that easy. You are retired as I am, and know how a bear market affects not only your portfolio but your life style & possibly your health because you don’t have as much time to recoup loses as someone younger. In my own portfolio, I found I had a much more concentrated portfolio when I was younger, and became more diversified as I got closer to retirement.

    • says


      I agree that bull markets are easier to invest in, because there’s less heartache and a lot more euphoria. However, for those accumulating assets cheaper prices are much better. It depends on your age. As Anonymous points out below, for those not accumulating assets any longer a bull market makes things easier – especially if you’re selling. However, the whole point behind dividend growth investing is that you shouldn’t have to sell any underlying assets for income. Therefore, technically the share prices shouldn’t really matter (assuming company fundamentals are unchanged). However, I can understand from a psychological perspective that lower prices are a negative for some. I suppose it all depends on your perspective.

      Best regards.

    • says


      Great point there. We technically have a lot of room to run on an inflation-adjusted basis. However, I still think the broader market is pricey here. Simply because I do not know how long it will remain pricey I continue to buy the best values I can find.

      And I agree with you in regards to the disconnect between the market and living off of your investments. Assuming that you’re simply collecting the interest and dividends your portfolio throws off, the “sticker price” shouldn’t really matter. :)

      Keep on having fun out there!

      Take care.

  11. Anonymous says

    Good point Mr Anon. Read article recently. Since 1900 markets correct:
    5% three times a year
    10% or more once a year
    15% or more once every 2 years
    20% or more every 3 years
    The crashes of 2000 and 2009 which resulted in 50% crashes were not “normal” events.
    I know I should not be timing the markets but i,m 50% cash because when the FED tapers there will be a switch from stocks to bonds. I don’t believe many people make money when the market crashes because they don’t have enough spare capital to deploy. FED tapering will happen within next 6 months …. i can wait that long. Reg, Jon.

    • says


      Interesting statistics there.

      I guess there seems to be some disagreement as to how much the QE is positively affecting the market. I would agree that the easy money is certainly fueling the fire, but I guess I’m not sure how much of a fire there would still be without the Fed’s involvement. Earnings and margins have been strong over the last few years as many companies have downsized and squeezed as much production as possible out of their smaller workforces. However, the general economy is still in a malaise for the most part. If the Fed decides to taper, that means just that – taper. It won’t be a cold turkey cut. Furthermore, tapering will means the economy is ready to come off the training wheels and is improving. Does that mean the market will fall significantly? Perhaps an impasse? Who really knows. It’s all pontification. I’ll just stick to building up my Freedom Fund. :)

      Best wishes.

  12. says

    Hey DM,

    Absolutely great post! Not sure what these guys are talking about. My portfolio is well above what they are talking about and staggered with stocks/bonds/reits and index funds as well as the Dividend Grower stocks we speak of here. I get the point and agree with it that we should keep a large (33%) cash allocation which is in line with a few other things I read on the subject including the Talmud view on Asset Allocation by Joshua Kennon, though few agree with me (us) on that, it will get us through most problematic Mr Market scenarios.

    • says


      Thanks! Glad you liked the post.

      It’s interesting that the article spawned some commentary on necessary cash positions, because I wasn’t really recommending throwing every dollar at the market. Instead, I urged a bit of caution showing how far the Shiller P/E has stretched. However, I still remain a bit oblivious to the broader market because I can’t control it. There are really only a limited set of circumstances I have direct control over, and so I concentrate on those. I think that should serve me fairly well over the long haul.

      We’ll see what happens. I’m hopeful a pullback, as that would allow all of us (as well as the companies we invest in) to purchase shares at more advantageous prices. That’s a win-win for all of us. :)

      Best wishes.

  13. says

    I am not currently investing, as my attention has diverted to rental home recovery.
    So I am going to wait for some time.
    As far as the rental, work has begun for remodelling, will be done within 2 weeks and I am not sure whether to sell it or rent it again!!!

    • says

      Dividend Mom,

      Sorry again to hear about your rental property troubles. If it were me I would get the repairs done and sell. Of course, I’m biased against rental properties as I don’t feel that the potential for larger gains is worth the headaches.

      Best of luck!

      Take care.

    • says


      I agree completely with selling a holding that becomes grossly overvalued, and am inclined to do the same if the circumstances warrant. I try to sell as little as possible because such events incur taxes and transaction costs, but will sell if the valuation goes overboard. This is, of course, a subjective matter and what I consider gross overvaluation will vary from your opinion. In the end, we all must continue to monitor our portfolios and do what makes sense for our individual goals.

      Have fun with the new capital. :)

      Best wishes.

  14. says

    I stumbled upon your blog not sure how I missed it before.I am an avid investor and student of the market, will say that your overall philosophy is impressive and can appreciate your technique.I am older than you and have played many parts in investing,ie: trying to trade too frequently ,experiments with options were actually my first exposure to the markets,many years ago.
    Since then ,and many investment books my knowledge has increased,however I still have an account that I like to trade frequently in,plus my other more diversified “trade less” accounts.To be quite honest the trade bug is hard to shake and reading your blog gives me pause to think smarter and eventually I will learn to hold forever any suggestions for this are greatly appreciated.Some of my stocks are ; BA,CTAS,KR,PETM,UTX,VLO,GMCR,
    also like your idea of partnering with a company for a long time,sometimes when I see a good profit I’ll take it and come up with another investment to fill the void.I am also starting to slightly market time buy keeping some cash build up just in case of a correction.

    • says


      Thanks for the kind words. Glad you stumbled upon my humble little spot on the internet. :)

      There are some investors out there that like to trade a little with a different account, or even just a small portion of their capital in one main account. I don’t follow suit, but I can see how it offers a little “excitement” in an otherwise “boring” method to investing. However, I actually find investing for the long term in high quality companies and receiving hundreds of dollars each month in turn as pretty thrilling. But I guess I’m a bit weird. :)

      Best of luck with both your investing and trading!

      Take care.

  15. Spoonman says

    This is like the time Lebron James kept announcing his resignation from Cleaveland (or something along those lines). The DOW reaching 16000 is one of the non-events that people love to rave about. Just wait until they wisper the word “taper” and you’ll see it come back down to reality very quickly.

    • says


      I agree. The DOW hitting 16k is mostly a non-event for long-term investors. For people with a short-term perspective, however, this probably creates an opportunity to cash out and wait. I try to look at things from 30,000 feet and think about where I’m going to be 10, 20 or 30 years from now. When looking through a lens like that it simply makes sense to avoid the headlines of the day.

      Let’s see when we finally get that taper. The last time it was mentioned the market reacted quite negatively. I’d love to see some cheaper stocks, and tapering would mean the economy is generally in good health. So that’s a win-win.

      Best regards!

  16. Anonymous says

    All my assets are not in my trading account. They are not cash but could be converted in cash in a matter of days or weeks. So how about this stategy : if there is a market correction, and if I have the guts, I buy what I want on margin, and then proceed to raise the cash that I need from my other assets , Thank you for your insight. Patrick

    • MarketTimingDoesNotWork says

      And what if the market tanks just the day after or say 2-3 days after you ‘had the guts’?

      Pretty difficult to identify the perfect entry point without supernatural powers…

    • says

      I saw the news of Dow 16000 or so, and can only say it was like a no news to me. But one thing I would like to make clear is that I pay attention to the yield curve, because in my opinion it is rather important to know when you have to switch part of your portfolio to tteasuries or hedge with treasuries. Would you like one or two years from now see your holdings being halved ?

    • Anonymous says

      I would suggest your age, risk tolerance, and what it is you want to buy comes into play before you start considering buying on margin. If you are at or near retirement age, I would not recommend buying on margin at all. Nor would I margin to buy some penny stock. There is nothing wrong with keeping your powder dry for opportunities, nor is there anything wrong with taking a profit. Right now there is a lot of excitement in the market & people are jumping in with both feet & even talking about margining to get on the gravy train. I think back to the words of Warren Buffett, ” Be greedy when others are fearful and be fearful when are greedy”

    • says


      It’s difficult to time the market like that. I can’t honestly give an opinion because I know nothing about your finances. However, I personally like to have my capital working for me at all times.

      Best of luck to you!

      Take care.

  17. says

    Same as you. Focusing on buying dividend growth stocks which will survive any tapering mess. Although I believe FED will never taper, so this fake growth will continue until it all crashes itself.

    Even if that happens, you want stocks which will not cut dividends during the crash or if the cut happens it will not hurt you.

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