Dow Investment Returns Over Last 80 Years: Just .99 Percent Per Year

cjr.org:

By my math, that means, the Dow has returned 0.99 percent a year over the last 80 years. Yow!

Audit Reader Edwin Hamilton also notes that the Dow has performed miserably over long investment horizons. He calculates that a dollar invested in the stock market in January of 1966 was worth--you guessed it--a dollar in real terms in September of 1995. Worse, that dollar invested in 1966 was worth only about 33 cents in real terms if you happened to cash out in October 1982, just before the great bull market began.

Read the whole story: cjr.org

Comments

[yourmomscalling]

04:36 AM on 01/08/2010

THIS IS VERY TRUE I CHECKED NICE HOW THEY TREAT YOU HUH !!!!!

[publius1]

04:39 PM on 01/07/2010

No try to imagine how bad the returns are for people who just have savings account!

[runintherain]

10:52 AM on 01/07/2010

All you really need to be happy in this world is food, shelter and clothing. We all need to get back to where we provide these things on our own and get away from investing. It is a zero sum game and the big guy with all the money is always going to win.

[hollybork]

12:55 PM on 01/07/2010

Okay, what about medical care and medicine? What about police protection, schools, roads, clean air and water, electricity and useful work? What about scientific investigation and inventions of engineering? What about art, architecture, wisdom literature and love? Living with food, shelter and clothing may have been enough for cavemen, but it is not enough for modern human beings.

[Artos]

10:16 AM on 01/07/2010

This is precisely why I've always believed that Investing in the Stocks is nothing more than a sham. It's primary goal is to take money from the average citizen for the purpose of expanding Big Businesses growth. Rather than use their own money they take millions of ordinary citizens dollars, use it and then give back as little as they can get away with. Once they've grown to gigantic proportions and they no longer need our money they pull a recession, which give them the out they need to screw the investors out of all their so called gains. In this way you come out with a zero sum balance. They need make no apologies because it's "Understood" that investing is a gamble. So the investor is expected to suck it up and not complain. Only when the investor is made aware of the ripoff such as happened with Madoff do the investors experience the outrage. Stocks are nothing but a ripoff.

[deepfreezevideo]

09:33 AM on 01/07/2010

The House ALWAYS WINS.

[MrBadExample]

08:34 AM on 01/07/2010

Bad as this is, I wonder which inflation computation they're using. during the Nixon administration, the BLS started using the 'core inflation' rate which minimized energy costs (this was during the 1973 Oil embargo). Clinton recalculated inflation in the mid 1990's to minimize changes in housing prices (on the theory that seniors traded houses less often--thus housing costs were weighted lower). Both drove down the annual COLA for seniors, even though it's clear that real inflation has been pretty high.

For more about this, look at www.shadowstats.com--it's a genuine apples-to-apples examination of everything from inflation to unemployment, and it explains why the changes were made. the site's author argues that there was negative economic growth during Bush BEFORE the september 2008 meltdown--once you factor real inflation into the CPI, GDP took a slight hit.

At least we know now.

[jake1492]

08:24 AM on 01/07/2010

3
It should be illegal for financial companies to issue large cash salaries and bonuses. Their incentive compensation should be in the form of stock only. That way, it other people who have money that has been generated from non-financial sources can pass judgement on how much real value has been created by buying their stock. The effect of course, would be to kill off the illegitimate "innovative products" because they simply wouldn't pay.

This whole house of cards depends on corruption.

[jake1492]

08:24 AM on 01/07/2010

2
This is in the same order of magnitude as the after inflation return one might expect from interest bearing investments, but is probably a bit better than the interest. The (optimistic) 2% real return is even more probably less than the return from dividends for solid companies over those years. The combination of appreciation in equity plus dividends is where the real money is. It just goes to show that money is just a number and it's value is really what somebody will do for it.

The wall street boys to whom this is not news have devised for themselves a way to not have to worry about what the dow does.......just pay themselves plenty of shiny freshly created phoney number money that can be laundered into the "real" money system. This is why we need strong, sensible regulation of the financial sector. We need to get rid of these illegitimate phoney "financial products". They are not products at all, just a way to make sure certain people get the money and the power. And the power part of that equation is why the regulation isn't happening.

[jake1492]

08:24 AM on 01/07/2010

1
The premise of the story seems to be basically sensible.
It appears that to say that the inflation adjusted dow has only doubled in 80 years seems to be technically accurate (although one could argue that it somewhat cherry picks the start date and of course is affected by the recent meltdown at the end of the period). A somwhat less pessimistic interpretation of the graph could be made just for comparison purposes. If the circa 1930 Dow were taken to to be the average of those years around 100 and the inflation adjusted dow taken to be what has been the average for the last decade of around 500, then the inflation adjusted dow has gone up by a factor of 5. When calculating the annual compounded return that shows a 2% return per year. The dow beat official inflation by 2% per year even making fairly optimistic interpreation of the data (assuming the inflation adjustment has been done accurately, and there is probably reason for suspicion that in later years has been significantly under-reported).

[CAPTAINSKIPPY]

02:02 AM on 01/07/2010

Are these returns: before? or after? - commissions and bonuses?

[PhilipTaylor]

01:59 AM on 01/07/2010

WHO WINS INVESTING IN WALL STREET MARKETS? ONLY WALL STREET CR00KS?

2010 DOW = 10,520.10 = 8,200 in 1999 Dollars (inflation!)

DOW = Would have to rise another 28% to reach 1999 levels = 13,460 reach 1999 level

http://cjrarchive.org/img/posts/realDow.jpg

L1ERS on Wall Street want us to believe DOW has gained 27 times its value in 1929 before crash!

FACT = Inflation-adjusted the DOW is only a little over twice its 1929 peak

DOW = Returned 0.99% / Year over the last 80 years.

Could it be the CHEATERS that RUN WALL STREET are the ONLY WINNERS?

YES! That is what the FACTS TELL US!

[nopilikia]

12:22 AM on 01/07/2010

I would be curious to know what the return on the Dow would have been up to 1999? I ask because the Gramm-Leach-Bliley Act of 1999 took effect in 2000. It made gambling by Wall St legal again. It was made illegal for Wall St to do so in 1908. Would someone who knows statistics be so kind as to help me out.?

[Manuel]

11:56 PM on 01/06/2010

With dividends re-invested, returns have been quite solid.

Manuel

[loki]

11:44 PM on 01/06/2010

yes, it is true. If you invest in the market your returns are usually very low. But if your the one of the few mandatory places that the gov allows us to invest in the market through, then the returns on investment is 10,000+ %

[Fabini]

11:32 PM on 01/06/2010

I invested in stamps at 10¢ now they are at 44¢. I feel I can retire.