- Since 1916, the Dow has made new all-time highs less than 5% of all days, but over that time it’s up 25,568%. 95% of the time you’re underwater. The less you look the better off you’ll be.
- The Dow has compounded at less than 3 basis points a day since 1970. Since then, its up more than 3,000%. Compounding really is magic.
- The Dow has only been positive 52% of all days. The average daily return is 0.73% when it’s up and -0.76% when it’s down. See above.
- The Dow has spent more time 40% or more below the highs than within 2% of the highs (20.6% of days vs. 18.4% of days) No pain no gain.
- The Dow gained 38 points in the 1970s. See above.
- Why am I using the Dow instead of the S&P 500? They’re effectively the same thing. The rolling one-year correlation since 1970 is .95. Stop wasting your time on this.
- At the low in 2009, U.S. stocks were back to where they were in 1996. Stocks for the long-run. The very long-run. Usually. Sometimes.
- At the low in 2009, Japanese stocks were back to where they were in 1980. See above.
- U.S. one-month treasury bills went 68 years with a negative real return. What’s safe in the short-run can be risky in the long-run.
- At the bottom in 2009, long-term U.S. government bonds outperformed the stock market over the previous 40 years Stocks generally outperform bonds, but there are no guarantees.
- Gold and the Dow were both 800 in 1980. Today Gold is $1,300/ounce, the Dow is near 26k. Cash flows > commodities.
- Over the last twenty years, Gold is up 340%. Stocks are up 208%, with dividends. You can support any argument by changing the start and end dates.
- Since 1980, Gold is up 153%. Inflation is up 230%. See above.
- CTAs gained 14% in 2008 when stocks lost 37%. Since 2009 they’re up 2.5%. Stocks are up 282%. Non-correlation cuts both ways.
- If you had invested from 1960-1980 and beaten the market by 5% each year, you would have made less money than if you had invested from 1980-2000 and underperformed the market by 5% a year When you were born > almost everything else.
- The Dow lost 17% in 1929, 34% in 1930, 53% in 1931 and 23% in 1932. Be grateful.
- Warren Buffett is the greatest investor of all-time. In the 20 months leading up to the dotcom peak, Berkshire Hathaway lost 45% of its value. The NASDAQ 100 gained 225% over the same time. No pain no premium.
- Only 47.7% of stocks generated a life-time return that match one-month treasury bills. The reason why so many mutual funds fail to beat the market is because so many stocks fail to beat the market.
- Dow earnings were cut in half in 1908. The index gained 46%. The stock market ≠ the economy.
- In 1949 the stock market was trading at 6.8x earnings and had a 7.5% dividend yield. 50 years later it reached a high of 30x earnings and carried just a 1% dividend yield. You can calculate everything yet still not know how investors are going to feel
By Michael Batnick, CFA, the Director of Research at Ritholtz Wealth Management LLC.
