Friday, October 12, 2012

Inflation-adjusted DJI trading 15% off 1999 High

Chart of the Day: For some long-term perspective, today's chart illustrates the Dow adjusted for inflation since 1900. Of interest is that the inflation-adjusted Dow has traded within the confines of an extremely long-term upward sloping trend channel over the past 112 years. It is also of interest that the secular bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s. Also, while the market action from the inflation-adjusted record high of 1999 to the financial crisis lows of 2009 was severe, the magnitude of this decline was much less than what occurred with the bear markets that concluded in the early 1930s and early 1980s. More recently, the Dow has retraced 89% of the financial crisis bear market with the inflation-adjusted Dow currently trading 15% off its 1999 record all-time-high - a rather dramatic turnaround considering the magnitude of the recent financial crisis.