Be still, my heart. For despite the hoopla surrounding this pseudo-event, there are lessons here: some new, some old. The new one is that you shouldn’t pay very much attention to the Dow, which is a crummy measure of the stock market even though everyone uses it, including me. The old lesson is that you shouldn’t let any number ending in three zeros determine what you do, no matter what assorted pundits and experts tell you. After all, it’s your money, your life, your investment decisions.

That said, a 6000 Dow raises the same questions people were asking when the Dow hit 4000 and 5000. If you’re not in the market, is it too late to join the fun? If you’re in, should you get out just in case the market has peaked? Will the next thousand-point mark the Dow hits be 7000 or 50007 No one knows, least of all those of us at NEWSWEEK. We’re the people who put a bear on the cover 2400 points ago.

But here’s some advice, anyway, before we move on to something more interesting-why it’s wrong to deify the Dow. Point one: yes, sooner or later the market will fall sharply, despite stocks’ having defied history and logic by rising almost continually since October of 1990. Point two: for heaven’s sake, don’t chase hot stocks or hot mutual funds unless you’re prepared to lose your shirt. Trendsurfing is fun, but sooner or later, you miss the wave and get wiped. Point three: please, please, please don’t take the Dow industrial average too seriously.

If the Dow hadn’t already been around for 100 years, no one would create it now. To be sure, very smart people tend the average and try to keep it up to date. Over the years they’ve modernized the Dow by leavening its portfolio of heavy industrials with such nonindustrials as Coca-Cola, Disney and McDonald’s. Still, the average’s built-in flaws make it subject to weird and random movements. And that brings us to the main and final point. The Dow can tell you which way the market is going, but it’s a crude tool. Obsessing about small moves–like whether 6000 says something that 5900 didn’t–is like using a cleaver to perform open-heart surgery.

Look at how the Dow actually works and much of what happens seems, well, odd. Let me give you some examples, courtesy of Birinyi Associates. Birinyi calculated how much each Dow stock included in the Dow contributed to (or subtracted from) the average during its climb from Nov. 21, 1995, when it first closed above 5000, to Oct. 14, when it first dosed above 6000.

For starters, two of the 30 Dow stocks, IBM and United Technologies, accounted for more than 20 percent of the rise. This odd couple had the greatest impact on the Dow even though their shares didn’t register the greatest percentage gain and their stock-market values aren’t even close to being tops. Had IBM and UT split their stocks 2 for 1 the day the Dow broke 5000, the Dow would still be flirting with 6000, rather than closing Friday at 6094.

Here’s why. When the Dow made its first appearance in 1886, people added numbers by hand. So the Dow is an average, which can be calculated quickly and simply. That’s why a dollar change in the price of any stock has the same effect as a dollar change in any of the other 29. A dollar move at Bethlehem Steel, which changes the company’s stock-market valuation by $110 million, counts just as much as a dollar move in Coca-Cola, which adds or subtracts $2.5 billion. For reasons we won’t get into, a dollar change moves the Dow about 2.98 points, regardless of whether a stock is $20 or $200.

Guess, then, which company has the most influence on the Dow? Nope, not General Electric, with $157 billion of stock-market value. It’s IBM, with a market value less than half as large. Why? Because, at Friday’s closing price of $129.$75. IBM was the highest-priced Dow issue. United Technologies, with a tenth of GE’s market value, is the second most influential Dow stock, bemuse its $127.375 price is the second highest.

To better understand the implications of this, flash back to elementary school, where we were taught how to calculate an average. To average $0 numbers, you add them up and divide the sum by 30. The Dow divides them by an eight-digit decimal, but you get the idea. Since a one-point move is much more likely in three-digit IBM than in $50 Coca-Cola, IBM moves the Dow more than Coke, despite Coke’s far higher stock-market value. Say that IBM tomorrow split 2 for I and its stock fell to $65. For reasons I don’t want to stop to explain, each dollar change in a Dove stock would then move the average by more than $ points rather than the current 2.98. IBM, at $65, would be less likely to move a dollar than it was at $130, but the other 29 stocks would be just as likely as before to move a dollar. So the other 29 stocks would become more important to the Dow, and IBM less important. Does that makes sense?. Not to me.

Consider another oddity. Say that AlliedSignal hadn’t split its shares 2 for 1 in 1994. The company would have moved about $41 a share during our period rather than half that much. AlliedSignal’s move would have added about 120 points to the Dow, rather than 61 points. The company would have moved the Dow by more than IBM did, rather than by 40 percent less. And we would have broken 6000 well before we did. Totally random.

Then there’s Bethlehem Steel falling 41 percent and dropping the average a mere 17 points, while United Technologies rose only 35 percent but added 96 points. Or IBM and Woolworth rising 38 and 39 percent, respectively, with IBM adding 105 points and Woolworth adding only 18.

The Standard & Poor’s 500 Index is a much better way to track the market as a whole. It’s based on the dollar value of all a company’s stock, not on the price of a single share. It can’t be skewed by a big one-day move in a single stock the way the Dow can. But let’s be real. The S&P lacks name recognition. The Dow is a relic, but it’s our relic. It’s been around a long time. Everyone is used to it. The Dow Jonesies have even managed to keep it tracking fairly well with the S&P 500, which is the benchmark that pros use to measure performance.

But even as we bow to the Dow, remember not to worship it. Venerating a relic is one thing. Letting it run your life–or shape your investment strategy–is quite another.

Who Counts, Who Don’t

Not all stocks are created equal. Here are some companies whose stocks rose (or fell) more or less proportionately during the Dow’s move from 5000 to 6000. But trait effect on the average was very different.

CHANGE FROM 11/21/95-10/14/96 STOCK STOCK PRICE DOW JONES Bethlehem Steel (minus)41% (minus) 17 points United Technologies (plus)35% (plus) 96 points IBM (plus)38% (plus)105 points Woolworth (plus)39% (plus) 18 points AlliedSignal (plus)46% (plus) 61 points DuPont (plus)47% (plus) 92 points Merck (plus)21% (plus) 37 points Westinghouse (plus)18% (plus) 9 points

Observe the Dow’s history from the time it first approached 1000. It used to take years for the Dow to add 1000 points; now it takes only months. Why? Clearly, stocks have been incredibly strong. But math plays a big role, too. Climbing to 2000 from 1000 meant the Dow doubled. But going to 6000 from 5000 is only 20 percent.