19 June 2009
For some long-term perspective, today's chart illustrates the Dow adjusted for inflation since 1925.
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.
Despite globally better news on the economic and financial front (well... let's see that will happen to commercial real estate), I believe that we have entered a period of market correction after a superb performance: look beyond the Western world tropism, emerging (leading?) markets (MSCI index) have increased by +/- 80% from through (28 October) to recent peak (2 June)! Since, they decreased by 8%.