(WLUK) — While the Dow Jones industrial average reached a record high, associate economics professor Marc Schaffer will tell you the economy is still complex.
“We’re still recovering from a financial crisis from 2008/2009. We’re entering an expansionary phase of the economy, which is a good thing. You’re seeing wages, raises, pick up a little bit,” said Marc Schaffer with St. Norbert College.
However, Schaffer thinks it’s important to pay attention to the numbers.
“The Dow’s gone up from 21,000 to 22,000 since March and while that seems significant, that’s a 1,000 point gain, that’s only a 4.2 percent return in the stock market,” Schaffer said.
At Macco Financial Group, Patrick Stoa, advises his clients to focus more on the long term like saving for retirement or a big purchase like a house.
“We have people in professionally managed and regularly balanced portfolio’s. And so, they’re not too concerned with where any one index is going. We also, honestly, try to train them that the Dow Jones is kind of an awkward index because it’s based on only 30 stocks,” said Patrick Stoa.
Schaffer credits what some consider the current administrations pro-business approach.
“For example, they put out a tax proposal in April that, will, were it to actually happen be very favorable to businesses in general. So, a lot of what’s happening in the markets is going to be reacting to an expectation of what could happen,” he said.
Schaffer also compared the Obama and Trump administrations.
“When Obama took office, Obama inherited an economy that was in a rough place, coming out of the financial crisis. The Dow was at about 6,500 when Obama took office. If Obama were to raise the Dow, if a president can even do that… if he were to raise the Dow, by 1,000 points, that’s actually a 15 percent return. Over the course of the entire Obama administration, if you would’ve invested in the Dow, you would’ve gotten 140 percent return from when he started to when he finished. If the Trump administration in going to achieve, let’s say, the same percent return, you’re talking about the Dow would have to hit closer to 48,000 or 50,000 by the time he’s done in office,” he said.
Schaffer adds, the stock market is unpredictable and fluctuates based on a number of factors and goes on to say low interest rates sends more money into the stock market because there’s a greater return.
“With a low interest rate environment, the only game in town is the stock market,” he said.
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