A reminder of the Dow's poor performance when inflation-adjusted, from Chart of the Day

Does it surprise you to know that the Dow Jones Industrial Average's performance is actually lackluster over the past 70 years, when adjusted for inflation? Of course, one of the reasons for buying equities over these years has been to gain exposure to take advantage of inflation. Well, here's another graphic reminder from "Chart of the Day". They also provide the explanatory comments in the quote, below:

Chart of the Day
For some long-term perspective, today's chart illustrates the Dow adjusted for inflation since 1925. There are several points of interest. For one, when adjusted for inflation, the bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s. Also, the inflation-adjusted Dow is now less than double where it was at its 1929 peak and trades a mere 30% above its 1966 peak – not that spectacular of a performance considering the time frames involved. It is also interesting to note that the Dow is up 30.7% from its March 9, 2009 low which is actually slightly more than what the inflation-adjusted Dow gained from its 1966 peak to today.

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This also sheds light of course on the reasons why people recommend gold, with the Dow-gold chart having some similaries in terms of showing that the rise into 2007 really wasn't as large as the nominal Dow chart makes it look. Not that I'm recommending gold - as I've shown repeatedly, gold right now is subject to the possibility of a large move down, so unless it really does break out above resistance, this is not the time to wade into it!

Naturally this isn't for thinking about where equities go on this Quadruple Witching opex Friday. But it's nice to keep in mind for the big picture, which is something we especially tend to look at on some weekends here. This weekend will be another good one for that!

One more note - I've made a few remarks from time to time about the Fed likely to be faced increasingly with unpleasant choice. Here's an article at Phil's Stock World where someone is spelling that out in some more detail (and data!): Thursday Comes: FedWatch, courtesy of Karl Denninger at The Market Ticker (6/18/09). Something else to consider going into the weekend.

So in the meantime, be careful out there as always, and happy market navigating!