Sensible Investing

A couple of days ago, the Dow Jones crossed the 10,000 mark.  Is this a cause for celebration?  Hardly.  According to Wall Street Journal, it was the 25th time the index crossed that milestone, the first time being in 1999.  So, despite the “meteoric” 50% plus gain of the Dow since March lows, we are still at the levels of 10 years ago.  By historical measures, markets gain about 10% annually, which translates to 250% gain in 10 years.  So this last decade has been quite horrible for the markets, as I am sure you realize.

This has happened before, in the thirties and then again in the seventies.  The last time, the markets were stagnant from 1966 to 1982, with Dow Jones bouncing around another round milestone, 1000.  There is no way of knowing how long the current stagnation will last, but the markets will revert to historical growth rates, as they have always done in the past.