Does the Dow hitting 40k matter?

investmentnews.com:

What’s in a number? Especially one like Dow 40,000, which was crossed this week for the first time ever.

To some financial advisors, it holds genuine significance, despite it being more of a psychological marker for investors than a true financial one. For these wealth management professionals, the Dow Jones Industrial Average piercing the 40k level offers insight into investor sentiment which in turn provides clues about consumer confidence, Fed policy and the overall economy.

To other wealth managers, however, Dow 40k holds less meaning, if any. For this cohort, it’s just another number. And the fact that it ends in a zero, or multiple zeroes, is meaningless. And even more so in this case because the Dow is generally viewed on Wall Street as an outdated index due to the fact that it is price-weighted. This means that price changes in the highest-priced stocks have greater impact on the index level than price changes in the lower-priced stocks.      

For example, Dow member Goldman Sachs recently traded at $467 a share, giving it a market capitalization of around $150 billion. That means it has a higher weighting in the 30-stock index than fellow financial, and Dow member, JPMorgan Chase which trades around $204 and sports a market cap of almost $587 billion.

Further devaluing the Dow’s importance in skeptics’ eyes is how its 30 components are selected. The index is maintained by S&P Dow Jones Indices, an entity majority-owned by S&P Global, and selected by a committee which judges the companies on their reputation and market significance.

The S&P 500, on the other hand, is purely market-cap weighted and has no outside, subjective influence.

Still, despite all its faults, Tim Holland, chief investment officer at