You won’t hear these facts on CNBC. They wouldn’t dare discuss anything in inflation adjusted terms. The Dow is up a measly 7.3% over the last 16 years on an inflation adjusted basis. That’s the good news. In reality, we all know the CPI is understated by at least 3% to 5%. So, in reality, the Dow is significantly negative over the last 16 years. Using a true level of inflation would show the Dow not much higher than it was in 1966 at the onset of the welfare/warfare state and before the unlinking of our fiat currency from gold.
If you were a connected insider or friend of the Fed (aka Wall Street bankers) you’ve done quite well since March 2009. But, it seems that once the QE spigot was turned off in October 2014, the Dow has gone nowhere fast. This faux bull market is dying of old age and lack of Fed injected fiat. It’s a long way down to long term support.
The Dow is currently trading 4% below its May 19th all-time record high. For some perspective, today’s chart illustrates the inflation-adjusted Dow since 1900 — there are several points of interest. Take for example an unlucky buy-and-hold investor that invested in the Dow right at the dot-com peak of December 1999. A decade and a half later, the inflation-adjusted Dow is up a mere 7.3%. That is not altogether an impressive performance considering that over 16 years have passed. On the other hand, take the investor who bought right at the end of the financial crisis. The inflation-adjusted Dow is up a significant 119% from its financial crisis lows — not bad for a for a seven year investment. More recently, the inflation-adjusted Dow has broken below support of a trend that has existed since the end of the financial crisis induced bear market.
