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Useless Quote of the Day

By JLP | July 8, 2013

Today’s quote of the day comes to us from the latest Kirk Karlgaard column in Forbes. This is the opening paragraph to his piece:

In early 1966 the Dow topped 1000 for the first time. In August 1982 the Dow was at 777. The apparent 22.3% loss in value over 16.5 years is actually much worse when adjusted for inflation—figure a 70% haircut, excluding dividends.

Why is this useless? Because he left out dividends.

I don’t have total returns for the Dow Jones Industrial Average but I do have the monthly total returns for the S&P 500 that we can use as an example. Based on my findings, using to the monthly total returns from January 1966 (the Dow crossed the 1000 mark during the day on January 18, 1966) through July 1982, the S&P had a total return of 130%. If inflation is included using the monthly CPI data, the total return over the period is -25%. No, it is not good. But, it is better than the numbers Kirk used in his column.

I have an email in to Dow Jones Indexes to see if I can get the actual total return numbers for the Dow. We will see if they come through for me.

Topics: Index Funds, Investing, Quote of the Day | 2 Comments »


2 Responses to “Useless Quote of the Day”

  1. BG Says:
    July 8th, 2013 at 10:54 am

    Yet in September of 1982 (1 month later), the DOW was pushing 900, and in October pushing over 1000. Always sceptical when people cherry-pick starting month/ending months like that. I don’t have the data for what happened in 1966, but you can bet he picked a high peak for “early 1966″, to compare with the lows in the ’82 recession.

    I much prefer calculations (which JLP tends to do on this blog), where you look at every x-year, using every month as a possible starting month.

  2. Jack Says:
    July 9th, 2013 at 8:52 am

    That is also how I do my calculations, BG.

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