Dow 12000

It’s good news any time the markets are going up, and, in this case, especially for psychological reasons. Dow 12000 is a nice round number that breaks through the constant, and false, bad-news and “yeah-but” clutter about the economy.

That said, it could be sooooo much better. Looking back to this January 23 post, you’ll see why. I wrote that four things would need to be in place for the markets to REALLY take off:

1. Have a large majority of companies meet or beat earnings expectations.
2. Make tax cuts permanent (better phrased as “lock in current tax structure”), including the end of the death tax.
3. Repeal the most onerous provisions of Sarbanes Oxley, especially for smaller public companies.
4. Enact meaningful entitlement reform involving individually controlled Social Security investment accounts and Health Savings Accounts for both Medicare AND Medicaid.

Number 1 has gone pretty well. In Number 2, the death tax remains, and the income-tax cuts have only been extended a few years — good, but not good enough. Number 3 is mostly not beyond the talk stage, though some deferral of the worst requirements has occurred. And Number 4 hasn’t been touched, except in a couple of states with Medicaid.

We might be talking about Dow 13000 right now if Numbers 2 and 3 had occurred, and the sky would be the limit if a financially sound version of Number 4 were ever to take place. More importantly, the S&P might be a lot closer that its current 10% off of its alltime high of 1527, and NASDAQ might be pushing 2500 or more instead of hanging at its current 2341.