UGLY: Inflation-Corrected Dow

This piece of ugliness is from Eric Roseman.

An incredible market development occurred recently as the Dow Jones Industrials (Dow) broke below 6,700 – its lowest level since 1997.

inflation-adj-dow-1900-01-01-to-2009-03-10_450x327

Stocks are now at the same level adjusted for inflation since 1966. Stocks have done absolutely nothing for your portfolio over the last 43 years and have badly lagged bonds and even T-bills.

 Should stocks crash another 50% from current levels – an unlikely event – that will put the Dow at the same inflation-adjusted level as 1929.

Amazingly, common stocks have gone nowhere since 1966 after including the consumer price index in the total return equation. The last time equities were in similar dire straits was back in 1982 when the same matrix saw stocks return a loss adjusted for inflation from 1966 to 1982. [more]

Of course, if you were to use John Williams’ “Shadow Stats” inflation statistics things would look even worse. (Since the Clinton administration gov’t inflation levels have been falsified to look better. Since 1990s inflation is under-reported by about 3%.)

cpi-2009-03

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