You have probably been inundated recently with media coverage surrounding Dow 10,000. Indeed, it's been wall-to-wall market pundits on the radio and television airwaves the last few days giving you their take on the significance of Dow 10,000 and how the market got to this lofty height. I don't want to underplay the significance of the three usual reasons: low interest rates, low inflation, and strong corporate profits — given by market experts for this historic move in the Dow. However, I think one more development is perhaps just as significant.

The market crash of 1987.

To see the Dow drop more than 500 points (losing roughly 22% of its value) in a single day in October of that year was, for some investors, their own version of the Great Depression. However, the difference between 1929 and 1987 - and it's a huge difference - is the speed with which the 1987 crash recouped its losses. Indeed, while most people remember 1987 as the year when the Dow dropped more than 500 points in a single day, it's a fact that the Dow Industrials actually posted a gain for the year overall.

Why the crash was so important to the Dow eventually reaching 10,000 was that what happened after the crash changed investors' perceptions of risk. Indeed, investors who held stocks through the decline and used the crash to add to positions realized fairly quickly that it was OK - no, it was a lot better than OK - to buy stocks on dips. That experience gave investors the fortitude to regard pullbacks as opportunities, which was displayed by their willingness to buy during subsequent market pullbacks.

This "buy on dips" mentality has been castigated by the financial media in recent years as one more indication of individual investors being "dumb money." After all, so the experts say, there will come a time when buying on dips will be a money loser.

That's hard to refute. Yes, someday buying on dips will turn out to be a bad idea. But when? One month from now? One year from now? 10 years from now?

My take is that investors are doing precisely the logical thing in buying on market corrections since such buying has been generously rewarded since the crash of 1987. Think about it - if you engage in certain behavior that is consistently rewarded, the logical thing is to continue to engage in that behavior. That's what buying on dips has been all about. You buy during the 1987 crash, you're quickly rewarded. You buy during the weakness in 1990, you're quickly rewarded. You buy during the correction in 1994, You're quickly rewarded. You buy during the market setback last August/September, you're quickly rewarded.

Investors' willingness to step up to the plate and buy stock during declines - a willingness conceived by the 1987 crash and reinforced by the quick recoveries following pullbacks in subsequent years - has probably been the single biggest factor in limiting any sustained downward move in the market in the last decade. For that reason, a Dow 10,000 owes its existence as much to the crash of 1987 as it does to any other single factor.

And since I don't see any reason why investors' propensity to buy on dips is likely to change in the near term, Dow 10,000 will likely be only a momentary stopping point to much higher levels over the next five years and beyond.

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