And you thought you had broken even. If investors had bought gold when the Dow first closed above 10,000 in March 1999, they'd be up almost 280%. Put another way, Dow 10,000 a decade ago “cost” 36 ounces of gold, treating each Dow point as $1. When the Dow revisited that level Wednesday, it was worth only 9.276 ounces of gold. In oil terms, the Dow has gone from 609 barrels to 133.
- The Wall Street Journal on "Dow 10,000."
There were somewhat half-hearted celebrations last week when an antediluvian stock index representing 30 companies selected by the editors of the Wall Street Journal crossed the 10,000 level. Again. This stock index, which is most affected by the change in the share price of an 85-year-old computer company, because it's a price-based and not value-weighted index, has been here before – as the graph below shows:
The Dow Jones breaks 10,000... again...
(Source: Bloomberg LLP)
There are some things that, the first time you do them, are memorable. But after the sixteenth or seventeenth time, a degree of familiarity (and in this case, boredom) sets in. Breaking through 10,000 for the first time in 1999 was all well and good, even if it meant you were paying all-time highs to own this crude and narrow measure of the US stock market. Breaking through 10,000 ten years later – well, who really cares, other than a narrow coterie of self-obsessed dealers en route to being replaced by machines?
Over-followed indices aside, equities are not exactly money as such. But what is? Traditional economics defines money by the following characteristics:
- A medium of exchange;
- A unit of account;
- A store of value.
As a medium of exchange, money facilitates trade on common ground without resorting to barter. As a unit of account, money
