Stock Market Perspective

Since there’s so much attention paid to the stock market today my post this morning to give a little perspective on the Dow Jones performance over the past thirty years.

The DJIA is not a bell-weather indicator of our economic performance.  Rather it’s a whole bunch of money managers and individual investors playing what I call “Las Vegas East” with the value of public companies stocks.  Some of it’s based in the actual value of the company, it’s products, research and development, future plans and the like.  And there’s a lot more of it these days based on emotions.  One manager gets scared, sells off a block of shares, and many others follow right out the door. 

So while I know that we will pull through this, I understand also that many are completely “freaking out” over the stock market.  I suppose if you’re 63 and all of your investment is in your previous employers stock your fears are warranted.  I’m 43, have a substantial amount invested in various mutual funds, and I’m looking at 20 years down the road.  And if you’re in my shoes, you should too.  Here’s why:

• Thirty years ago the DJIA stood at …………$818.85 – 6/30/78
• Twenty years ago it stood at………………$2.104.02 – 6/17/88
• Ten years ago the DJIA value was………..$8,712.87 – 6/19/98

Given the $10,984.00 DJIA value when I gathered this info on 6/24/08, this represents an increase of:

• $10,984 (1335%) since 1978
• $9,703.00 (461%) since 1988
• $4,024.39 (51.73%) since 1998

In that span of thirty years our economy has had its share of ups and downs, but as investment managers will tell you to keep your eyes on the long-term (assuming you’re of the appropriate age to do so).  Put your money in solid, diversified portfolio’s, and go play tennis, ride your bike, enjoy life. 

This is certainly a time for us to learn from our mistakes, prepare for the worst, but keep moving forward with a positive attitude about our economy.  Remember, this great country has conquered a whole lot worse than what’s going on now (see “The Great Depression”), and we’ll weather this storm as well.

This is not investment advice.  I’m not a money manager.  Which is why I invest my money with good money managers.  Do your research, and pick a fund(s) that reflect where you are in your life, and what your plans are for the future.

Tags: DJIA, dow jones averages, Positive Economic News, stock market, stock market history