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The Dow Jones Has Rewarded Investors 68,300% in Over 120 Years of Existence

Last Updated September 23, 2020 1:16 PM
Kiril Nikolaev
Last Updated September 23, 2020 1:16 PM
  • The Dow Jones managed to climb above 28,000 on Friday.
  • The last 120 years has shown that the Dow moves in cycles but has always managed to print record highs.
  • The current bull market has entered its 120th month, and one Fed official believes that the economy has more muscle.

The Dow Jones Industrial Average just topped 28,000 on Friday, thanks to strong performances by Apple Inc, Home Depot, and United Technologies. These three companies contributed a combined 714 points  since mid-July to push the index to an impressive 11th fresh record high in 2019.

Many traders celebrated the blue chip index’s historic ascent. One, in particular, saw the momentous rally as a fitting occasion to remind everyone about the Dow’s mind boggling growth throughout the years. Ryan Detrick, a senior financial strategist , took to Twitter to illustrate the power of playing the long game.

If invested in Dow Jones
An analyst emphasizing the impact of ignoring day-to-day noise | Source: Twitter 

The 68,300 percent growth in 120 years discounts dividends, which could have significantly increased the yield. Nevertheless, this is a powerful illustration of neglecting market fluctuations and keeping your eyes peeled on the prize.

The Dow Jones and Markets Move in Cycles

A legendary investor once said, “buy when there’s blood on the streets.” This is a sound investment advice provided you have the patience akin to Warren Buffett.

Over the last 120 years, the Dow Jones went through numerous cycles of growth and contractions. Some were longer than others, but every single one provided an opportunity to accumulate massive fortunes. For instance, the Panic of 1901 devalued the stock market by 46 percent . It took the Dow 19 years to recover from the crash, but when it did, the index rose from 100 points to close to 400 points by the end of the 1920s.

If you bought while there was blood in the streets, you would have made enough money to shield yourself from the nasty impact of the Great Depression. The Dow lost nearly 90 percent of its value  when it bottomed out in 1932. However, this was another opportunity to amass wealth.

It took the index 25 years to regain what it lost, but it never looked back. The Dow climbed from 40.6 points in 1932 to 741.3 points in 1961. That’s astounding growth over 1,725 in 30 years.

Long Term Dow Jones
The Dow Jones may crash but it always recovers and prints new highs. | Source: MarketWatch 

The immense 30-year growth was followed by a period of consolidation as the Dow traded within a 400-point range for about 20 years. Those who bought during this accumulation period would have amassed an immense fortune.

When the index broke the range in 1983, it skyrocket to 14,198.1 by 2007. That’s an increase of more than 1,319 percent 24 years.

These cycles of growth and contraction are long and arduous, but they pay off. That’s why investing should be like watching a tree grow. Those who are patient are often rewarded.

Bull Markets Don’t Die of Old Age

The current bull market has entered its 128th month after the DJIA bottomed out at 6,470 in March 2009. Since then, the stock market has printed gains of 332 percent, which is making some investors wary. Many fear that a downturn is on the horizon just because the bull market is over a decade old.

Nevertheless, San Francisco Federal Reserve President Mary Daly believes that the economy has more room to grow. The Fed chief said,

Expansions don’t die of old age.

Even if this is the top and the economy crashes, history has shown that the Dow Jones eventually recovers. Throughout the 120 years of the blue chip index, there have been ups and downs. Nevertheless, the Dow has always blasted off after a period of consolidation. When the move up starts, the index tends to never look back.

 Disclaimer: The views expressed in this op-ed are solely those of the author and do not represent those of, nor should they be attributed to, CCN.com.