yeah yeah, I know, this post was first published last Friday (for the fastest of you) before I realise that I was posting twice on the same day… so here we go again with tables:
Considering the latest news on employment and how economists see the US future (yeah, I know I shouldn’t trust them, but they can’t be wrong all the time 😉 ), more and more investors are heading back to the stock market.
While the easy money has already been made, back in 2009, there is still a lot of room for investors to see some interesting yield from the Dow Jones. Why choose this stock index over the S&P 500? Because the following chart about the Dow Jones yield per decade starting from 1908:
Year Dow Jones Return
As you can see every time there is a negative decade on the Dow Jones, the following one is that of a big boom. It seems that we are running around in the same circle over and over again: we get all enthusiastic about something, about the magic and never-ending economic source that will guarantee prosperity for everybody.
Recently (in the past decade), we have seen the rise of Internet and what they called the “new economy”. Websites were selling based on traffic or ads. No need for income or profits anymore… and then we finally realized that we needed money to keep the business alive.. Interesting how the new economy was depending on good old sound financial basics 😉
Only a few years ago, financials had become the most prolific economic beasts ever created. Investment firms and international banks were making money through many kinds of innovative products (remember the credit swap definition?). They financed a whole bunch of people who didn’t deserve credit based on the right to own your property. In the end, those people were stuck in the insidious trap of mortgage payments and adjustable rate mortgages and everybody paid (and are still paying) the high price for this mistake.
Now that we have gone through 2 huge market crashes implying the total collapse of sectors of the economy, historic data shows us that the Dow Jones is set to enjoy a very interesting decade in terms of yield. Will it really work as simple is this? I am not quite sure about that!
While 2009 was a great year on the Dow Jones (it was + 20%) and 2010 should be quite interesting too in terms of yield, it may be too soon in the new decade to talk about one of the best periods of the Dow Jones. Plus, we are starting our calculations from a market low (beginning of 2009) so chances are that numbers will be on our side for the next 5 years at the very least (the usual length of a stock market cycle is 5 to 8 years).
In order to determine if it’s the right time to invest in the Dow Jones or not, I thought of providing you with the Dow Jones stocks and performance for the past 12 months (as of March 17th):
Ticker Name Price 1Y Return MMM 3M Co $82.11 73.36651 AA Alcoa Inc $14.52 162.2873 AXP American Express Co $40.88 226.2578 T AT&T Inc $25.90 8.818792 BAC Bank of America Corp $17.21 175.3991 BA Boeing Co/The $69.11 107.7033 CAT Caterpillar Inc $60.20 133.4311 CVX Chevron Corp $74.71 18.82229 CSCO Cisco Systems Inc $26.25 62.70137 KO Coca-Cola Co/The $53.90 34.21815 DD EI du Pont de Nemours & Co $36.44 86.65482 XOM Exxon Mobil Corp $67.41 -0.01678489 GE General Electric Co $18.08 85.75392 HPQ Hewlett-Packard Co $52.45 77.57225 HD Home Depot Inc $32.47 56.23695 INTC Intel Corp $22.12 53.27623 IBM International Business Machines Corp $128.05 40.47857 JNJ Johnson & Johnson $64.62 31.59445 JPM JPMorgan Chase & Co $43.73 75.04522 KFT Kraft Foods Inc $29.67 33.17644 MCD McDonald's Corp $66.37 28.00577 MRK Merck & Co Inc $37.75 48.71565 MSFT Microsoft Corp $29.58 78.64304 PFE Pfizer Inc $17.18 25.45616 PG Procter & Gamble Co/The $63.91 37.49042 TRV Travelers Cos Inc/The $52.97 35.33754 UTX United Technologies Corp $72.14 77.56541 VZ Verizon Communications Inc $30.15 7.44437 WMT Wal-Mart Stores Inc $55.93 14.28737 DIS Walt Disney Co/The $33.61 90.71697
Now then, it is now up to you to decide if the Dow Jones will really go through one of its best decades in terms of investment returns!
|How I Suck at Not Paying Debts||Hitting 6 Figures Income at 28|
|How I Get a Huge Income Raise Each Year||Making $125K Online in 12 months|
|How I Buy Blogs||Most Debated Articles: The Primerica Saga|
|How I Have Survived My MBA||What is So Wrong With Making Money?|
|How I run multiples blogs and makes money without burning out|