Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

New Dow Jones Record? Stock Market Actually in Freefall Since the Year 2000

Stock-Markets / Stocks Bear Market Nov 18, 2013 - 10:04 AM GMT

By: Richard_Moyer

Stock-Markets

Lately, the Dow Jones Industrial Average and most every other market index have been on a tear, setting new records every week. There should be hairy asterisks aside these "records" that belie the larger truth: these aren't records at all. They aren't even close to the January 2000 record of 11,720 in terms of real stuff.


The high jump world record is a shade over 8 feet, set by a slender Cuban fellow, Javier Sotomayor. What makes his record useful, and comparable to other attempts is that the inch stays the same. It has a definition that doesn't change year to year. The dollar, however, constantly loses value. Calling the present DJIA measure of 15,962 a "record" is equivalent to me redefining the inch down by half and then claiming the high jump record for myself.

So what's reality? The graph below shows how the Dow actually performed by comparing how much of a commodity $11,720 would have bought in 2000, and how much $15,960 would buy in 2013. Pick your poison, 'cause it ain't pretty.

Stock-market-measured-in-commodities-since-2000.PNG

Take the Euro, which is a floppy, fake money substitute just like the dollar. In spite of the European Central Bank's whizzing printing presses, it's still beating the old US greenback. It was just barely over a dollar in January of 2000 when the Dow was breaking 11700, but now it's $1.33. While the Dow appreciated 36% in terms of dollars, it only appreciated 3.9% in terms of Euros.

How about a Honda Civic or a Big Mac, two relatively constant products? One is a cheap hamburger, the other is a cheap four-banger sedan. Back in 2000, you could buy a Civic for $10,350, or less than the Dow. Today, the $17,000 plus MSRP of a basic Civic exceeds the Dow by a thousand or more. Sure the Dow went up by 36% in dollars, but in terms of Civics and Big Macs the Dow is down by 19%.

Commodities make it look even worse. Between steel, corn, soybeans, oil and gold, the Dow is 37% to 68% below its January 2000 peak.

It shouldn't come as a surprise, in the midst of a global recession, that companies by any consistent measure would be less valuable than when things were going well. What's disturbing, though, is that no meaningful conclusions can be made when measuring with dollars. Furthermore, the nation makes its financial decisions through the wildly distorted lens of the US dollar with terrible results. Only amidst the dollar's acid-tripping, money-printing delusions could the wholesale exportation of American industry be regarded as the cure for what didn't ail us. Only in an atmosphere of free money could the frenzied accumulation of debt be viewed as a sensible replacement for productive activity. And, ultimately, it is this bend in space-time that makes the stock market set new records in terms of dollars while plumbing new lows when measured any other way.

Richard Moyer

http://shadesofthomaspaine.blogexec.com

© 2013 Copyright Richard Moyer - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Nadeem_Walayat
18 Nov 13, 15:48
Bull Market Confusion

Hi

The bull market began in March 2009 after the end of the last bear market. Your confusingly picking the top of the preceding bull market.

A similar mistake could be made if for instance I picked the btotom ot the 1930's bear market that would show today's Dow is up by 40,000% !

Best

NW


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules