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TheStreet Open House

So The Dow Hit A Record; Now Where Do We Go?

By CHRISTINA REXRODE

NEW YORK (AP) â¿¿ So the Dow Jones industrial average broke a record this month. Now what?

It's impossible to predict how the Dow, that popular barometer of the stock market, will zig and zag from here. The only thing certain about the market is that there will be more peaks and valleys ahead, and that's about as specific as a fortune cookie.

But we can look at the previous times the Dow burst through a record, and measure how long it kept rising and why it eventually stopped â¿¿ ending the bull market. And what does history show?

After it broke one record, the Dow kept rising for nearly nine years. After another, it rose for seven years, and after another, for five. But after one, it topped out just two months later. In most cases, the bull run ended because inflation and interest rates were rising and investors feared a recession loomed. Those conditions don't exist today.

The Dow closed at 14,253.77 on March 5, beating its October 2007 record by 89 points. In the eight trading days since, it has risen on seven of them, setting a record each time. Its only down day was Friday.

So far, its highest close ever was Thursday, when it reached 14,539.14.

Here are previous long-held Dow records since World War II, when they were broken and what happened after. Jamie Farmer, a managing director at S&P Dow Jones Indices, helped with the calculations.

â¿¿RECORD DAY: Nov. 23, 1954. The Dow breaks the record that had stood since September 1929, closing at 382.74.

â¿¿RISE CONTINUES: It keeps rising for seven years, gains 92 percent and peaks at 734.91 on Dec. 13, 1961.

The Dow's record-breaking day in 1954 was a long time coming. It had been 25 years since the index hit 381.17 on Sept. 3, 1929, when the Roaring Twenties were still roaring. The Dow plunged in the Great Depression and bottomed at 41.22 in 1932 â¿¿ down an astonishing 89 percent from the 1929 peak. For the rest of the 1930s, it never came close to regaining all its losses. The highest it reached was 194.40 in 1937 â¿¿ still down nearly 50 percent from the 1929 high.

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