Good News for Investors as Dow Jones Tops 10,000

On Wednesday, the Dow Jones industrial average rose over 115 points. By itself this would be positive news; but what really has Wall Street buzzing today is that for a while the Dow Jones surpassed the 10,000 level, marking the first time since last October that it cracked that magic barrier.

Realistically, the Dow Jones at 10,000 is mostly a psychological issue. However, we should remember exactly how far we have come in just a few months. Back in March of 2009, Morgan Housel of the Motley Fool projected that the Dow Jones might be headed towards 5,000 and that at the then current compound annual return of 5%, the Dow Jones would not hit 10,000 again until 2016.

I am thrilled to hear the news about the Dow Jones hitting 10,000. For all of the talk about the balance sheets of stocks, P/E ratios and strong management, one of the most important things to consider is consumer confidence. The Dow Jones passing 10,000 is the type of thing that could encourage additional investors to re-enter the marketplace. Most of the money investors withdrew after the Dow Jones hit 14,000 is waiting to be put back into play again.

As a casual investor it is good news for me. Mostly I am a buy-and-hold investor, although I have made changes to my portfolio since the last market decline which happened in the wake of 9/11. Of the eight mutual funds I own, seven have been ones I have purchased after cashing in various funds from previous work retirement accounts.

My current portfolio was built without the aid of a financial advisor. Instead, I rely on the advice of Morningstar.com. According to Morningstar's X-Ray Interpreter, my "portfolio is aggressive. An asset mix such as yours normally generates high long-term returns but can be very volatile. Financial planners typically recommend these types of mixes for investors who have investment horizons longer than 10 years, need high returns, and are comfortable with a high level of risk."

With the research available to me as a Morningstar subscriber, I feel confident enough to make my own investment choices and I have created a portfolio which an advisor would be hesitant to recommend for me. Morningstar says my portfolio "is spread evenly across the market and includes a good mix of small, medium, and large companies." However, it feels like I have a lot of exposure to speculative growth stocks and ones in the Telecommunications industry.

During the recent economic downturn, I was reminded how aggressive and how risky my personal portfolio is, as I saw its value cut in half. But in order to maintain an aggressive portfolio, one has to be able to withstand some volatility in the marketplace. Since my investment horizon is still a long-term one, I knew that it was in my best interests to wait out the market.

Since the nadir of the market, I have already recovered over 50 percent of my lost earnings in a little over seven months. I did this without market timing or trying to chase hot sectors. Instead, I held my position in funds that I believed in and I have great confidence that my portfolio will continue to thrive in the coming months and years.

The Dow Jones hitting 10,000 is a good thing for the investment community. The recent rally on Wall Street has occurred over numerous industries, including banking and technology. Even the retail market has shown signs of life. A broad based recovery is a wonderful thing and I think investors should seize this opportunity to re-enter the market before prices climb too much higher.