The Dow Jones Industrial Average index has been introduced on 26 May 1896 and it has 30 components.
DJIA’s 10 year history covers the entire financial crysis and 1-2 years preceeding it. Today it is cca. 6000 points above its pre-crysis peak (20500vs. 14400) Actually it was growing rapidly since 2009, then the trend stopped for a while and it continues now.
People often say that long term investments carry less risk than short term ones.
- Index value has grown from 12919 to 20547 throughout the past 10 years which equals only 4.75% annual profit.
- 5 year yield curve spends the majority of time on the positive domain.
- 3 year yield curve seem more volatile than the 5 year one, but it actually moves in a wider domain since August, 2012 .
What can you see on the chart?
You can calculate DJIA’s 1 month return from DJIA’s value today and DJIA’s value 30 days ago. You can also do the same calculation for yesterday and DJIA’s value 31 days ago etc. If you do this calculation for each days, you will get a curve of DJIA’s 1 month yield. The same applies to other yield periods from 3 months to 5 years.
This chart shows the three and the five year yield curve in the past 10 years.
Treshold marked with red shows 0% return.
This chart shows Dow Jones’ relative change against the US customer price index in the past 10 years.
There was a quite long period when Dow Jones index has been underperforming the US customer price index.
*charts are not updated on a daily basis but you can prepare similar charts for yourself by using Chartoasis Sesame. If you feel like analyzing DJIA’s historical price, you can do that for free at www.chartoasis.com/sesame . You will also need to download DJIA historical data. This step-by-ste guide will explain you how to do it.