Friday, August 28, 2009
Stock and Bonds (The Medieval Kinds)
As of today, the trailing price earnings ratio of the DJIA is 54 right now. Historical averages are somewhere in the 20s. There is significant noise here, of course, but it appears we may have a long way to fall when it comes to asset prices.
(I'm not going to source any of my numbers here, since this is a rough thought exercise)
As of today, Dow is at 9,581. On Aug. 20, 1999, the Dow was at 11,100. If you invested $10,000 in 1999 in the Dow (and did not reinvest dividends), your investment would be worth the equivalent of $5,783 in 1999 dollars. If you'd reinvested dividends, you'd probably recapture $2,000 of that loss or so, but it would still be a loser's day (decade) at the ballpark.
How did the American equity market make it through a decade of profound technological innovation (and related increases in productivity) and unprecedented globalization (and attendant decreases in prices) while the equity markets went worse than sideways?
On a lighter note, the Bureau of Labor Statistics has a little green dinosaur next to any link to historical statistics.
(I'm not going to source any of my numbers here, since this is a rough thought exercise)
As of today, Dow is at 9,581. On Aug. 20, 1999, the Dow was at 11,100. If you invested $10,000 in 1999 in the Dow (and did not reinvest dividends), your investment would be worth the equivalent of $5,783 in 1999 dollars. If you'd reinvested dividends, you'd probably recapture $2,000 of that loss or so, but it would still be a loser's day (decade) at the ballpark.
How did the American equity market make it through a decade of profound technological innovation (and related increases in productivity) and unprecedented globalization (and attendant decreases in prices) while the equity markets went worse than sideways?
On a lighter note, the Bureau of Labor Statistics has a little green dinosaur next to any link to historical statistics.
Labels: japan's lost decade?
¶ 4:05 AM
