DJIA - Inflation

[imoldernu]

Apropos of nothing important... just a look at the Dow, at its low in 2009, and today, and a look at inflation over the same period.

DJIA
$6627 March 2009
$18120 July 2015

273% increase

Inflation
$6627 2009
$7347 2015

10.5% increase

and when I retired:

DJIA when I retired
1989 $2550
2015 $18120

Up 710%

Inflation
1989 $2550
2015 $4890

Up 191%

 

[Tadpole]

What is it if you looked at it from it's high in 2008?

 

[karluk]

I'm fairly certain that the DJIA doesn't include reinvested dividends (the S&P500 index doesn't include dividends either). That fact alone makes it questionable to compare the Dow to cumulative inflation numbers. A better comparison would be DJIA + reinvested dividends vs. inflation.

 

[imoldernu]

What is it if you looked at it from it's high in 2008?

Well, the previous high was in $13522 in 2007, so that would be a 34% increase.

Not important, but fun to look at numbers, and to reflect on the why's, the when's, and the what happens next.

 

[mathjak107]

how about from the high of 2000 to now . 2.1% real return . while it is cherry picking if you had no money invested , it is very meaningful if you did since for 15 years that existing older money in equity's kind of just about died on the vine .

it was other asset classes that had to run with the ball to keep things growing .


S&P 500 Return Calculator - Don't Quit Your Day Job...

 

[imoldernu]

how about from the high of 2000 to now . 2.1% real return . while it is cherry picking if you had no money invested , it is very meaningful if you did since for 15 years that existing older money in equity's kind of just about died on the vine .

it was other asset classes that had to run with the ball to keep things growing .


S&P 500 Return Calculator - Don't Quit Your Day Job...

Thanks... Yes. An excellent example of how statistics can be so misleading. Boiling this down to the basics, the essence of the reason why FireCalc takes the extra steps of determining "chance for success", and why cherry picked dates and numbers can be so dangerous in making investment choices.

Playing with the tables in the cited calculator, and choosing dates that are just months apart, produces unimaginable distortions in the statistics, especially for those points in time where markets are very unstable.

A good friend who retired in the middle of 2008, watched his invested net worth plunge, and in the early part of 2009 opted to protect his remaining assets by going to cash, and in the process, losing almost three quarters of a million dollars.

Investing genius... a matter of looking backwards or ahead? Here's another interesting page that gives a longer view... something to consider.
Historical Chart Gallery: Market Indexes - StockCharts.com - Free Charts