From Ken Little,
Your Guide to Stocks.
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Are the new records being set by the Dow a reflection of a strong bull stock market or something else?

Since mid-July the venerable blue chip index has been on a fairly steep climb of roughly 1,800 points.

Along the way, it has set several new records and many believe more will be set in coming months.

The tech-heavy Nasdaq and the broader-based S&P 500 have also experienced some impressive growth, but not on the scale of the Dow.

Why this impressive growth of the Dow? The signs are all in place for continued market strength (barring geo-political disasters).

The economy is still strong, inflation is not the huge threat it could be, oil has fallen from over $70 a barrel down into the $50s – all of these are positive signs for the market.

However, you could also interpret growth in the Dow as a rush to security.

By this I mean, investors want in the market, but are still cautious about the future. The safest bet for many are the market leaders found in the Dow.

The 30 entries that make up the Dow are all large cap stocks that represent the bluest of the blue chip stocks.

The roster represents some of the most stable and well-behaved companies in the market - just the type of investment that a conservative investor nervous about the market would look for.

The reality is the Dow is probably growing for all the above reasons. Large companies have the resources to take advantage of a growing economy.

Many trimmed down during the early part of this decade when the economy was sputtering. Those that have the opportunity will use their muscle to seize market share and expand globally.

Meanwhile, cautious investors could do worse investing in these market leaders. There is a chance that if the economy continues at about the same pace or expands that more growth oriented companies will out perform the Dow crew.

For future reference, here are the component companies of the Dow:

• 3M Co.
• Alcoa Inc.
• Altria Group Inc.
• American Express Co.
• American International Group Inc.
• AT&T Inc.
• Boeing Co.
• Caterpillar Inc.
• Citigroup Inc.
• Coca-Cola Co.
• E.I. DuPont de Nemours & Co.
• Exxon Mobil Corp.
• General Electric Co.
• General Motors Corp.
• Hewlett-Packard Co.
• Home Depot Inc.
• Honeywell International Inc.
• Intel Corp.
• International Business Machines Corp.
• Johnson & Johnson
• JPMorgan Chase & Co.
• McDonald's Corp.
• Merck & Co. Inc.
• Microsoft Corp.
• Pfizer Inc.
• Procter & Gamble Co.
• United Technologies Corp.
• Verizon Communications Inc.
• Wal-Mart Stores Inc.
• Walt Disney Co.