Fri 19 Jun 2009
Dow Jones – a long-term perspective
Posted by Prieur du Plessis under Investment, Markets, Money
In order to gain some long-term perspective of the magnitude of the movements of the Dow Jones Industrial Average, Chart of the Day provided an inflation-adjusted graph dating back to 1925.
The following observations are of particular interest:
• The bear market that finished in the early 1980s was almost as arduous as the one that concluded in the early 1930s.
• The inflation-adjusted Dow is now less than double where it was at its 1929 top. It is also trading only a relatively modest 30% higher than its 1966 peak - not that impressive considering the long period involved.
• Considering the recent rally, the Average gained 30.7% since its March 9 low which is slightly more than the inflation-adjusted Dow’s performance from its 1966 peak to today.
Source: Chart of the Day, June 19, 2009.
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June 19th, 2009 at 3:56 pm
This chart is highly misleading as it fails to include the value of dividends which have historically accounted for roughly 40% of the total return of the Dow. Showing stock market performance without dividends is meaningless.
June 19th, 2009 at 10:34 pm
The thought of continuing the channel oscillation gives one pause. I developed something similar last year, but it seemed unreasonably bearish. Not so sure today. Weak fundamentals on many levels with major insolvent companies propped up by mountains of new debt (like we didn’t have too much already). Something’s got to give. I’m not buying any stocks here except as a trade.
June 20th, 2009 at 7:38 pm
Great post! Thanks for sharing. Kind of depressing for equity investors unless you factor in dividends. If anything, this chart furthers the point of how important dividends are to overall return.