Only if your investors sucked.  Actually, mine has about doubled now.  The secret?  Stay out of the dot com crap of the clinton years.

You have it pretty much correct.  The Dow is not even indicative of the market in general, just 30 blue chips.  The S&P is a much better indicator of how the market is doing.  But the market is an indicator of the over all feeling of investors (who as we saw with the dot com crap is not always right).  When the market is advancing, as it is, the investors feel the economy is doing well and that the companies will ride the economy to bigger and better profits.  So in that respect, it is a lagging indicator of expectations, but often a leading indicator of the performance of the economy as you do not want to get in on a stock at its peak, but rather as it begins its assent.  And unlike most of us, these investors (the good ones) do not pay attention to headlines, they dig for the numbers underneath to make their buys and recommendations.

While the strength of the market is a positive influence on consumer confidence, that is about all it is.  But if you are going to watch the market to gauge the economy, you will always come up short because often the market is still rising, when the economy has already started to weaken.  Catch it on the upswing (knowing the difference between an upswing and a short blip is important and damn near impossible), and you can retire in no time!  Mis time your jump into the market, and you are going to be that 80 year old Wal Mart Greeter.