The Dow Jones Industrial Average has never been higher. On Tuesday, after a run-up of 125 points, the index of 30 blue chip companies closed at 14,253, beating the record close set in October 2007. Wind back those five-plus years, and you’ll recall we were on the verge of a global financial collapse and the worst recession since the Depression.
So what are we to make of crossing this line? Especially if you believe it’s not industrial behemoths like Alcoa, General Electric, and Procter & Gamble – all component companies in the Dow – that are the economic engines of our future but tech companies like Apple, Google and Facebook. What’s a tech investor, or even an employee of a tech company, to do?
Invest in tech, says Kevin Landis, president of Firsthand Capital Management, a mutual fund company, with $300 million under management. Landis’ largest holdings are Apple, Amazon, Google and Facebook. On the secondary market, he’s also purchased a chunk of still privately held Twitter.
“I think of the Dow as possessing what I would call psychological incumbency; it’s probably that simple as to why it’s followed so closely,” Landis says. “But as an active investor, I am glad people follow it. I do better in a world where people look at the wrong things.”
That Wall Street was celebrating the Dow on Tuesday, and not the tech-heavy Nasdaq, is a function of how ridiculously expensive tech companies were back in the bubble days of 2000 when the Nasdaq hit a record 5,049. On Tuesday it closed at 3,220. Nowhere near a record, but higher than it’s been in 12 years...
