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
1908-1918	60%
1918-1928	254%
1928-1938	-49%
1938-1948	14%
1948-1958	226%
1958-1968	77%
1968-1978	-19%
1978-1988	165%
1988-1998	331%
1998-2008	-9%

After booms come busts, after busts come… booms!

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).

What is in the Dow Jones Anyway?

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 17^th):

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!

 

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