Top Home Mortgage News

This is the first part of a several part retrospective of the Dow. The point of reviewing the past is to attempt to assist you to get the facts of where we are in our economy and where we are going over the next several years. It is easy to buy into what the media reports without doing your own research; however, much of this media is devised for self serving interests. In future articles of this retrospective, I will be fully analyzing each data point; however, this is to serve as an introduction to the series.

The following images are the graphs from 1895-2006. These graphs come from Dow Jones Index site.

Dow Jones 1895-1909

Dow Jones 1895-1909

During this era, the Dow Jones was extremely low compared to today. It had opened this era at only 45. During this time, it would hit a high of approximately 45. During growth time frames, the Dow Jones industrial would run up 100% and more over 2 years. It, also, experienced drops of 50% over two year time frames as well. During this time frame, the return was approximately 67%.

Dow Jones 1910-1919

Dow Jones 1910-1919

During this era, it showed as a period of mainly volatility. Also, two major things had occurred. The first one being that in 1914, the stock market had closed down for several months due to a large crash in the market. It resumed trading later in 1914 when the first world war was beginning.  From 1910-1919, the return was approximately 9% for the entire period.

Dow Jones 1920-1929

Dow Jones 1920-1929

The next great era is the first era that we moved from volatility to an upwards direction. This was the first time an era had witnessed a real bull market. The market had rallied over 8.5 years from 100 to 375. This was the first major upward motion the Dow had made; however, such rampant growth lead to the 1929 market crash where the market had dropped 54% from the all-time high. Over the course of this era, the Dow Jones had rallied 135%.

Dow Jones 1930-1939

Dow Jones 1930-1939

The next decade has two major events. The first one being The Great Depression. The stock market continued to plummet from the 20′s to record lows. It had dipped from it’s all-time high of 375 all the way down to 40. The Dow Jones Industrial Average had lost 89.4% of it’s value from a few years ago, and dropped to record lows. Franklin Roosevelt began office in 1933 and began to restore order in the markets. It took the rest of the century to even bring the Dow back to 150. This decade saw the Dow drop by 49%.

Dow Jones 1940-1949

Dow Jones 1940-1949

The next decade was a major shift back to a full fledged bull market. The market opened up this time frame at around 150. Throughout this time frame, the index had moved up to close to 225. This time frame had shown many major war activities. The most specific activity involved the completion of World War 2.  During this period, the Dow Jones had risen 47%.

Dow Jones 1950-1959

Dow Jones 1950-1959

This period was a period of full fledged growth in the United Sates. The Dow Jones had moved from 225 to approximately 700. This was a major era of technology growth and less dependant on war to move the market. Eosenhower led most of the rampant growth through this century. This era saw the Dow grow 288%.

Dow Jones 1960-1969

Dow Jones 1960-1969

The 60′s was an era of market volatility. The market had run up to a high point of close to 1000, and the market had dropped down to as low as 500. The market even was volatile during non-recessionary time frames. With all the market volatility, during the Vietnam War, civil unrest had occurred causing even more volatility. Through all the volatility, the return over this time frame was only 17%.

Dow Jones 1970-1979

Dow Jones 1970-1979

The 70′s where another very interesting time frame. The Dow Jones had reached an all time high of 1050 at the end of 1972. Since hitting that mark, oil prices had spiked upwwards drastically due to heavy hand of OPEC. Near the bottom, Nixon had resigned bringing in Ford to save the economy. The economy had quickly dropped 50% and just as quickly had made up those lost numbers by doubling. After reaching the all time high again, the Dow had sloped back downwards to end at approximately 850. The total growth through the 70′s was only 5%.

Dow Jones 1980-1989

Dow Jones 1980-1989

This was the beginning of a new era in the stock market. This was the era of the bull market and this would be only the beginning. The gains would be great during this era with only one set back in 1987 where the Dow Jones lost close to 1000 points within a short duration of time; however, even with such a great collapse, the market still gained 267% during this time frame.

Dow Jones 1990-1999

Dow Jones 1990-1999

The 90′s where a continuation of the 80′s; however, in the 90′s everyone was making money without very much downside. Very slightly did the market go down during this time frame and it was not very difficult for an investor to know what direction stocks would go in. Longs where king for the last 20 years. Employment rates were high and productivity was high as well. During this time frame, the Dow Jones had a return of 362%.

Dow Jones 2000-2009

Dow Jones 2000-2009

The first decade of the new millennium brings with us a lot of volatility. The beginning bubble was the tech bubble of the new millennium. The stock market would continue to be volatile through this time frame due to the increased amount of trading, media, and other outlets to move stock prices. The market entered this era at close to 12000 after the bull run of the 80′s and 90′s. It had begun the 80′s at 750 and blasted all the way up to at the highest point of 14000. The market has recently begun a downward trend. Currently, the Dow Jones is sitting at approximately 8000, down approximately 43% from the all time high.

The time frame when we saw rampant growth proceeding a recession was in the 20′s. The market had shot up 375% over the course of 8 years. Everyone was making money and doing well; however, this was purely an exaggeration and the market had made a correction. The market had dropped close to 90% before continuing its upward trend. The correction appears to correct the over exaggerated growth from previous years.

From the beginning of 80′s to the markets all time high of 14,000, the market had spiked a dramatic 1750% over the course of 27 years. This amount of growth is higher than the growth achieved in the 20′s, a market correction has been long overdue; however, is 43% the maximum we will drop in this market downturn, or do we have a long way to fall still?

The following table shows the markets returns over the last 100 years:

Save your Mortgage from the Bank. Simply Mortgages can Help!

Welcome back!

Related posts:

1. Is Renting ever Better than Buying? Why is Buying so much better? Your email:  Before making the decision to purchase one’s first...
2. The Economic Year Ahead and Protecting Yourself with Hedges 2008 has been an extremely tough year for everyone. It...
3. A Brilliant Economic Recovery At this point in the trend of the market, government...