A Tale Of Two Kitties

Nine lives, and counting.

This Dow-cat danced right up to 9000 last week, played with it a bit, then went into to one of those feline crouches, where the only visible movement is the flick of a tale.

So will it, or won't it hit 9000?

And what does it mean for you? We'll get to that question in a minute, but first, turn to Page B6, where Guy Halverson's article makes a convincing case for piercing that millennial mark.

The reasons work out to, essentially, "all of the above." Everything looks good: inflation, interest rates, oil prices, productivity, consumer confidence, retail sales, economic growth, and about a billion dollars a day flowing into stocks. Plus - yikes! - so much momentum it confounds the experts. Point your peepers at that Dow chart to the right - 15 years to reach 2000, three years for 3000 - then a matter a months to take out 6000, 7000, 8000, and (almost) 9000.

Spry kitty.

But wait a minute, Morris! Continue reading on Page B6. Jim Tyson lays the groundwork for a Dow cat whose ninth millennium may be its last, for a while.

That argument boils down to the notion that the market is overstretched, that stocks cost more than they are worth. And markets always overstretch - at least they always have. It's just a question of when, and whether 9000 represents that moment.

Your basic cat on a hot tin roof.

Maybe this doesn't seem like the Monitor's classically clear and sensible approach to issues that appear intricate and complex.

And that's true, in a sense. But keep in mind that this is brand new ground for stock-market performance. Historical precedent has been treated like some stray animal - branded a nuisance and bundled off to the animal shelter until someone claims it or ...

But that's not the point of this coverage of the Dow. Because here's what it means to you.

Zip.

Let me guide you to the two most important features in this week's Work & Money.

1. The chart on Page B7. Look closely. It reveals the virtual impossibility of trying to time your investments to whether the market moves up or down. Timing works only if you buy on all the lows and sell on all the highs. Miss just a few, and you might as well stuff your money in a mattress. It holds true whether you look at the past 20 years or the past 70.

The only strategy that rings true over the long term is buy and hold. Boring but beneficent.

2. The Basics on Page B2. This is where we define the basic terms of investing. This week we look at dollar-cost averaging, and it is the most important strategy to follow. And the simplest. It means investing regular amounts of money at regular intervals - for example, $250 into your mutual fund of choice on the 15th of every month.

If you dollar-cost average, you'll be investing when the market rises, and falls.

Which makes a Dow 9000 irrelevant. If the market moves higher, you're in. If it moves lower, you're buying low and will gain even more when it heads up again, as it always has.

So if our Dow-cat encountered an ill-tempered Rottweiler tomorrow and scampered to 8000, dollar-cost averaging means you'll buy your mutual fund shares on the cheap.

Nice kitty.