Thursday, October 15, 2009

DOW hits 10,000! Oh, wait....

The press is giddy over the fact that the DOW has hit 10,000. We're saved!

Not so much.

Tyler Durden, over at Zero Hedge, shows that the DOW, compared to the 10,000 mark of ten years ago is worth a little over 7,000.
...the truth is that over the past 10 years (the first time the DJIA was at 10,000) the dollar has lost 25% of its value. Therefore, we present the Dow over the last decade indexed for the DXY, which has dropped from 100 to about 75. On a real basis (not nominal) the Dow at 10,000 ten years ago is equivalent to 7,537 today! In other words, not only have we had a lost decade for all those who focus on the absolute flatness of the DJIA, but it is also a decade where the US Consumer has lost 25% of purchasing power from the perspective of stocks!
And the DOW on a gold basis, showing its value on a commodity basis, is even worse. Unless, of course, you own gold:
It cost about 30 ounces to buy the 10,000 Dow last time. Now it costs less than 10.
h/t Insty




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