Inflation-Adjusted Dow: No Record Set Yet
Here's an interesting chart from chartoftheday.com, via Barry Ritholtz at Seeking Alpha. (Click on the chart for a larger version.)
[Thanks to chartoftheday.com and Seeking Alpha for the image.]
Chart of the Day makes some assumptions that I believe are unwarranted. As Barry says, we can't be sure what it all means.
On the other hand, the chart does give us a new perspective on the Dow, mainly on these points:
1. The Dow has not broken it's inflation-adjusted 1999 record.
2. The 1980 crash ("bear market" as Chart puts it) was as bad if not worse than 1929.
3. There is a possibility -- not necessarily a probability -- that the Dow could be overvalued; but this is one of those conjectures that is difficult to prove or disprove.
Moreover, I would question the data behind the red and green lines. How did they decide where to position them, and at what angle? I suspect these very specific parameters rely on something as foolproof as wishful thinking or a throw of the dice.
But as Barry says, it's still "interesting stuff" if only because it brings the Dow's seemingly vertical nominal explosion since the early 1900's back into perspective.
[Thanks to chartoftheday.com and Seeking Alpha for the image.]
Chart of the Day makes some assumptions that I believe are unwarranted. As Barry says, we can't be sure what it all means.
On the other hand, the chart does give us a new perspective on the Dow, mainly on these points:
1. The Dow has not broken it's inflation-adjusted 1999 record.
2. The 1980 crash ("bear market" as Chart puts it) was as bad if not worse than 1929.
3. There is a possibility -- not necessarily a probability -- that the Dow could be overvalued; but this is one of those conjectures that is difficult to prove or disprove.
Moreover, I would question the data behind the red and green lines. How did they decide where to position them, and at what angle? I suspect these very specific parameters rely on something as foolproof as wishful thinking or a throw of the dice.
But as Barry says, it's still "interesting stuff" if only because it brings the Dow's seemingly vertical nominal explosion since the early 1900's back into perspective.
posted by Katy Delay at 2:01 PM
1 Comments:
Please stop referring to the DJIA!! I know you are more intelligent than that, so please use a better constructed index (S&P 400/500, etc.) than the antiquated DJIA. Thanks
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