Thursday, 21 September 2017

Dow Jones One Million

Buffett expects the Dow to be 'over 1 million' in 100 years

As sensational a headline as that one seems, an annual return of an historically low 3.87% will see the DJIA reach one million 100 years from now. 

Over the last 96 years, including the Great Depression when the index lost 80% of its value, the index has averaged an annual increase of 8.35% with a median of 8.01%.

If that 8.35% is maintained, DJIA 1,000,000 will be reached in less than 50 years.

Warren Buffett is being too cautious!  

The best ten years were those from 1989-1998 (an average increase of 16.12% per year). 

47 years saw a double digit percentage gain, while another 19 were up by less than 10%. 

The 96 years is evenly split with 48 Republican and Democrat presidents in office.

The stock market historically does far better under the Democrats, averaging 9.85% annual increases, than under Republicans, with an average of just 5.78%. So much for the myth of Republican fiscal responsibility! 

24 of the 30 down years were overseen by a Republican president, including five of the six where the loss was greater than 20%. 

Of the most recent presidents, Clinton averaged 16.64% (median 19.37%) with one (of eight) down years, Bush Jr. averaged an annual loss of -0.89% (median 1.27%) with four (of eight) down years including the disastrous 2008's -33.84%, (all, it should be remembered, after inheriting an $86 billion surplus from Bill Clinton) while Obama averaged 10.98% (median 9.27%) with one down year. Not bad after the huge mess he inherited in 2009
The current White House incumbent has been gifted a growing economy, and thanks to Obama and his policies, the market is at record highs right now, with record low volatility as I've written about earlier this year. Whether the 3% promised can be achieved remains to be seen, but if the world can survive the next 1,139 days, Dow Jones One Million should be a cinch - if they can keep electing Democrats.  

1 comment:

Rodolfo said...

Hi, Cassini!

What's your take on cryptocurrencies? Bitcoin in particular. From what I've read and heard, blockchain might be a phenomenal technology. I'm following Jeff Berwick from The Dollar Vigilante and few other anarcho-capitalists and libertarians including Doug Casey. Berwick is very optimistic of Bitcoin as in his opinion crash of fiat currencies (especially US dollar) is looming.