HOW IS THE DOW PERFORMING IN TERMS OF REAL MONEY?
The Dow has performed well over the last 30 years in U.S. dollars, but how has the market performed when priced in gold? Not so well according to Chart of the Day:
The stock market has been rallying over the past 10 months. So, is the stock market performing well? It all depends on how you measure. When measured in US dollars, the Dow currently trades approximately 29% below its all-time record high. However, when measured with that other world currency (gold), the picture is even more bleak. To help illustrate the point, today’s chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 9.3 ounces of gold to “buy the Dow.” This is considerably less that the 44.8 ounces back in the year 1999. When priced in gold, the US stock market has been in a bear market for the entire 21st century.
Notes:
- Where’s the Dow headed? The answer may surprise you. Find out right now with the exclusive & Barron’s recommended charts of Chart of the Day Plus.
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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hmmmm, what this appears to be telling us is that the Dow, measured in real money, has already fallen over 80% from it’s peak, a peak it hit ten years ago. Why on earth can’t this happen with the Dow measured in fiat money? The Man of the Year is powerless at preventing this scenario from playing out.
On a somewhat separate note, I found the ‘lost’ Trader documentary about Paul Tudor Jones. Not sure if you’ve seen it, but I’ve had it on re-run for five days straight. This guy is absolutely unbelievable. What I find interesting in watching it (over and over and over again) is that I believe his bear market prediction that he initially thought would play out after the Great Crash of 1987, is actually happening today. This is the end of the 200 year bull market, 1987 just wiped out some of the financial excesses, excesses that look like a walk in the park compared to the gluttony of the last 15 years. This is also why Prechter is 200% short, the common thread here are these ‘mysterious’ Elliott Waves. The only catch is, the macro outlook trumps all else, Prechter doesn’t understand this so his timing is often times questionable.
http://www.ritholtz.com/blog/2009/10/the-missing-paul-tudor-jones-video/