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Inflation Adjusted Chart Of Dow Jones Industrial at Trader’s Narrative





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Often it seems our analysis of the markets are like children looking at ants through a magnifying glass. So once in a while it is always useful to take a step back and get a long term perspective. The chart below shows the inflation adjusted Dow Jones Industrial Average since 1925.

There are a lot of lessons to glean:

  • While the corrections in 1929 and 1964 were of equal magnitude, the latter took much longer to play out.
  • The 1960’s top (previous resistance) acted as support and repelled prices to initiate the spring rally in March 2009.
  • The Dow trades at less than twice where it closed at the 1929 top.
  • After more than 40 years the Dow is only trading a trifle 30% above its 1964 peak (inflation adjusted).
  • Finally, the Dow managed to rise 31% since the spring rally in March 2009 - that is amazingly a pinch more than the gain from the top in the 1960’s.
  • The Dow has traded in a very wide and rising trading range - so if you are really really pessimistic, you could say we are headed to 4000 (eventually)

inflation adjusted Dow Jones Industrial long term chart
Source: Chart of the Day

To get a full picture, compare this to the (very long term) inflation adjusted chart of the S&P 500 index.

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One Response to “Inflation Adjusted Chart Of Dow Jones Industrial”  

  1. 1 blues

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    “so if you are really really pessimistic, you could say we are headed to 4000 (eventually)”

    I was thinking more of 2000 and SPX goes to 200s also…

    We are no better now then in 1980s… I would say worst… MUCH HIGHER DEBT and no saving…

    Quality of Job?! Replacing GM with Walmart, ya we are doing better! Ya right, much lower pay jobs.

    So what gotten better? You tell me…?

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