The Dow Jones Industrial Average index has been introduced on 26 May 1896 and it has 30 components.
Dow Jones’ value seems to be going up with short pauses since its lowest low in 2009. Rising trend seemed to be stopped for a while, but DJIA value started to rise again.
People often say that long term investments carry less risk than short term ones. Well, this more or less fits Dow Jones.
- Index value has grown from 12927 to 20547 throughout the past 5 years which equals 9.71% 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 5 years.
Treshold marked with red shows 0% return.
This chart shows Dow Jones’ relative change against the US customer price index in the past 5 years.
There was only a very short 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.