Dow Jones Industrial Average soon turns 115 years old

The Dow Jones Industrial Average turns 115 years old on May 26, and the U.S. stock market icon is still robust and relevant.

The Dow DJIA -0.55% is an index of 30 stocks. It started in 1896 as literally an average — thus the name — of a dozen stocks: The prices were added up and divided by 12. It became an index in 1928 when a divisor other than the number of stocks was introduced to compute it. That also is when the number of stocks was raised to 30 from 20, which had prevailed since 1916.

Since its introduction, the Dow has logged more than 31,530 trading days through May 6. (The measure was the invention of newspaper publisher Charles H. Dow, a founder of Dow Jones & Co. Inc., publisher of MarketWatch.)

Of those, the Dow rose on 16,403 days, or 52% of the time, and fell on 14,789 days, or 47%. It was unchanged on only 337 days, or 1%. The data show that the Dow does have an upward bias, but by less of a margin than some people might imagine.

The magnitude of the daily gains and losses was close to even. The gains averaged 0.72% each “up” day and the losses averaged 0.75% each “down” day. The medians also were close: 0.51% for gains and a drop of 0.50% for losses. However, the fewer “down” days means that market retreats usually are sharper than market advances.

Indeed, it is the length of rising and falling trends that steer overall market performance. These trends affect yearly returns, to be sure, but also those of entire decades. These tables tell the story:

Interestingly, none of the “best” years have occurred in the past three decades, while 2008 ranks third on the “worst” list.

The 1990s saw the Dow’s biggest advance, followed by the 1950s. The only two decade-long retreats were the Great Depression of the 1930s and the Great Recession that we’ve just experienced. One historical note: stock trading was suspended in 1914 from August through Dec. 12 because of the outbreak of World War I, which pertains to the seventh-ranked “worst” year.

ANCAPS: ANARCHO-CAPITALISTS

CovOps wrote:: Interestingly, none of the “best” years have occurred in the past three decades, while 2008 ranks third on the “worst” list.

So might we be overdue for a great year?

Gamblers fallacy...

http://encyclopedia.tfd.com/Gamblers+Fallacy

Dow Jones Industrial Average soon turns 115 years old

Dow Jones Industrial Average soon turns 115 years old

Anarcho-Capitalist Categorical Imperatives

AnCaps' Laissez-faire Free Trade Zone