COMMENTARY | COLUMNISTS | GEORGE CHAMBERLIN

Dow Jones average sets record at 14,253.77

On a numbers basis, it was just a pretty good day. When Paul Carrico, CEO of Axiall, rang the closing bell at the New York Stock Exchange, the market was up a decent 0.9 percent. But in the grand scheme of things, it was hardly just another day.

Not only did the Dow Jones Industrial Average gain 125.95 points to 14,253.77, but it also closed at the highest level since the index of blue chip stocks started trading May 26, 1896. The old record closing high was set Oct. 9, 2007. To put it mildly, the six years between the old and new highs have been filled with peaks and valleys.

After peaking at 14,164 on that fall day in 2007, the stock market went immediately into a freefall, bottoming out at 6,547 on March 9, 2009, a loss of more than half its value in less than two years. Few people thought it was a great time to jump back into the market, considering the devastating trends in the U.S. economy.

But in hindsight it was perhaps one of the greatest buying opportunities in stock market history. For investors with the moxie to buy and hold through the peaks and valleys, the rewards have been quite handsome.

Consider the performance of some local stocks from the first peak to the second. For instance, shares of Sempra Energy (NYSE: SRE) 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 (Nasdaq: QCOM) path was different. On the day the market closed at its 2007 high, its shares were $36. People were just beginning to get excited by a new product from Apple, which had released the first iPhone a few months before the markets peaked. Qualcomm technology was part of the product's success.

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 (Nasdaq: LIFE) 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.

The record run for the Dow industrials has featured some spectacular performances. Consider Home Depot. At the top of the market in 2007, shares of the home improvement company were at $33.80, but plunged to $18.23 by March 9, 2009, as the housing market also went into a freefall. But since then the shares have appreciated 285 percent to $70.47.

However, the best performance of a Dow stock from the bottom has been American Express (NYSE: AXP), which got caught in the downdraft as financial companies were punished by investors. It closed Tuesday at $64.12, a gain of nearly 500 percent from its March 2009 low of $10.64.

There are many lessons to be learned from the performance of the stock market since Oct. 9, 2007. The uncertainty of the economy, both global and domestic, political turmoil, lingering high unemployment, and the consequences of Federal Reserve policy can certainly give investors pause.

However, investors who read the the annual shareholder letter released last from Warren Buffett's company, Berkshire Hathaway (NYSE: BRK.A), might gain confidence from a simple sentence: “Opportunities abound in America.”

The Dow Jones Industrial Average closed at 14,253.77 on Tuesday, breaking its previous record of 14,164.53 on Oct. 9, 2007. The chart tracks the performance of Qualcomm Inc., Life Technologies Corp. and ResMed Inc. between the Dow’s most recent record highs. Since Oct. 9, 2007, ResMed showed the largest gain of 122.8 percent to $45.17 per share, Qualcomm shares increased 59.4 percent to $67.97 per share and Life Technologies gained 46.3 percent to $61.75 per share. Source: Bloomberg | Compiled by: Jenny Ross

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