Dow 20,000 Is No Vote of Confidence

There’s always a fuss when the Dow reaches a nice, new, big, round number, as it did on Wednesday. The excitement is almost always overblown -- the market is more than the Dow Jones Industrial Average, the economy is more than the market, etc. -- and this particular milestone comes with the potential for additional misinterpretation: Dow 20,000 does not necessarily amount to a vote of confidence in President Donald Trump's ability to deliver economic growth.

The Dow has gained about 10 percent since Trump was elected, and for good reason: His proposed policies would augment the stream of cash flowing to investors. Reduced corporate tax rates, for example, would leave more money to pass on to shareholders, while cuts in capital-gains rates would allow them to keep more for themselves. The mere possibility of such a windfall offers investors ample motivation to bid up stocks.