Annual Comments on the DJIA

Dow Jones 2013 average

Image courtesy Google Finance

Welcome to my annual tradition of year-end comment on the Dow Jones Industrial Average.

First of all, I’m not a stockbroker, so these comments are just observations, and not advice.

Every year I track how the DJIA is doing. If you read my earlier blog posts, you’ll see that I ask people not to get excited by high and lows of the market. Slow growth is better for the economy as a whole. I say this because most of the previous highs were artificially stimulated by the fraudulent misrepresentation of corporate financial statements.

  • 2010 DJIA was 11,577
  • 2011 DJIA was 12,218
  • 2012 DJIA was 13,105
  • 2013 DJIA, as I write this 12/31 at 11 am, is 16,536.

Do you think this increase of more than 3,000 in one year is valid? Did we as a country do that much better this year? Or do we, the investors, just show more confidence in the market?

Looking back in my blog, I said that it was a dramatic change when there was a doubling from 1996 to 2006. So if doubling in ten years is too dramatic, is a 5,000 point increase from 2010 too much? At this rate, the DJIA for 2020 would be 33202. My warning is that the DJIA shouldn’t double in 10 years. It shouldn’t be greater than 23,154.

If you know me personally, you know that I am not a doom and gloom type of person. I am a person who observes closely and interprets data. So while many people will be excited with the growth, I, on the other hand, am going to be cautious.

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