Yesterday’s 1.58% decline for the Dow Jones Industrial Average was the 6th worst first day of the year in the history of the Dow (going back to 1929).
If history is our guide, we’re in for a ho-hum year. I looked at the 20 worst first trading days for the DJIA and then looked at the return for that year. Please note that I used price returns for the DJIA and also included total returns for the S&P 500 because I don’t have total returns for the DJIA going back that far. Because I used two different indexes you’ll see instances where the total return is less than the price return.
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 inflationfigure 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.