Poll: Is Record High Dow a Sign the Economy’s Bubble is About to Burst?

Dow Jones share index hits record high

When the Dow Jones Industrial Average of blue-chip stocks closed at a record high Tuesday, it meant different things to different pundits.

“It signals that things are getting back to normal,” said market strategist Nicolas Colas, quoted by The Associated Press. “Unemployment is too high, economic growth too sluggish, but stocks are anticipating improvement.”

But USA Today quoted Walt Zimmermann, a technical analyst at United-ICAP, as saying: “The attitude investors should have is that they are walking on thin ice. The ice is softening and they should be listening for cracks.”

In a San Diego Daily Transcript commentary, executive editor George Chamberlin wrote Tuesday about how local companies have done since the last Dow peak in October 2007:

Shares of Sempra Energy … closed Oct. 9, 2007, at $59. When the depth of market was reached March 9, 2009, utility shares had dipped to slightly above $40. Patient investors have been rewarded as Sempra shares closed Tuesday at $79.52.

Qualcomm’s … path was different. On the day the market closed at its 2007 high, its shares were $36. When the markets bottomed in March 2009, Qualcomm’s shares were at $36.75, but the best was yet to come. Qualcomm closed Tuesday at $67.97, after announcing earlier in the day it was raising its dividend and launching a $5 billion stock buyback.

Life Technologies was near $42 at the 2007 peak and dropped to about $29 at the bottom in March 2009. Anyone who stuck with the stock has been rewarded, as the price more than doubled in the past three years to Tuesday’s close at $61.75.

Whether your portfolio is benefiting or not, how does the Dow look for the overall economy?  Out of work and still not feeling the glow? Or seeing nest egg grow?