March 2003 – January 2007 Dow Gains

On Monday, we looked at the Nasdaq, and noted that most of the gains over the past 4 years came in 2003.

Today, we look at the Dow Industrials:



The Dow chart is also very front loaded, but a bit more bifurcated than the Nasdaq, with literally all of the gains coming in 2 spurts: Of the 67% run up from the 2003 lows, the lion’s share came in that 1st year. From March 2003 to February 2004, the Dow tacked on over 42%.

From February 2004 until July 2006 — a period of about 2 and 1/2 years — the Dow was essentially flat (plus 1% per year). The big run up since July 2006 accounts for the remaining chunk of gains — but only about a third as much the 2003 run.

Of the 67% the Dow has gained since March 2003, just under two thirds occurred in the first 8 months; Abotu a third occurred over the last 8 months. The middle 30 months saw neglible gains.

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What's been said:

Discussions found on the web:
  1. Michael C. commented on Jan 10

    Is there something significant here that I’m missing?

  2. Bob A commented on Jan 10

    Amazing to me how little attention in the headlines to the major adjustment in the foreign ETF’s in recent
    GCH from 32+ to 23
    TRF from 90+ to 72
    MXE from 30+ to 23

  3. MarkTX commented on Jan 10

    The whole chart seems to be upward biased

    If a person did not know any better, a person would find it hard to believe that there was any bad new/events in the USA during the time period, or better yet….bad news does not matter to the stock market.

    The “managed society through finance-experiment must be working????

  4. HerbieS commented on Jan 10

    the market will probably start its crash later today or tomorrow. I cant be more exact than that.

  5. Philippe commented on Jan 10

    It seems that the last move up in the last six months 2006 have been well programmed and capital was abundant for acheiving the design of the mother card of most of the European market CAC DAX which are homothetic to the Dow and SP 500.
    This graphic is similar to the Treasury notes 10 years in 2005 , the Bund and OAT.
    It is interesting to see these charts in context of economics fundamentals and the romantic views; studies;confrontations of Bulls and Bears.

  6. MarkTX commented on Jan 10

    Looks like another +100 pt. intraday move up for the dow….unbelievable

  7. Bill a.k.a. NO DooDahs commented on Jan 10

    Since most of the gains come in short periods, wouldn’t it have really really really hurt to have been bearish on the U.S. stock market from August to December of 2006?????

  8. RW commented on Jan 10

    Why would it necessarily hurt to be bearish? All it means is a difference in asset mix; e.g., I’ve been skeptical of equities since 1998, bearish since 2000 and a full-blown grizzly since May of last year but made good money shorting tech in 99-00 then going long oil and gold into ’06; I wasn’t net short equities at any time, including now, just more (or less) strongly hedged.

    Has there been some opportunity cost there? Sure, but not a whole lot, and I don’t feel I had much choice since I’ve had no idea what’s holding the markets up for some time now.

    Whatever, to paraphrase the old adage, it’s okay to be wrong as long as you still make money (besides if I said something in the forest my wife would insist I was wrong whether she heard it or not so I’ve stopped worrying about those kinds of things).

  9. Bill a.k.a. NO DooDahs commented on Jan 10

    The general thrust of the post appears to be an overall market statement that returns on the index come in short bursts. Therefore, being “wrong” as a market timer, i.e., *generally* bearish on equities when the market is in one of its “up” moves, really really really hurts.

    Your statement relating to sector and/or asset class analysis/rotation is not relevant to the post or to the comment.

    Being bearish on equities from 1998? When in 1998? Lots of opportunity cost there … you should look at three-year charts of the Dow and S&P ending in Dec 2000. Just about any investment point in equities in 1998 would have total return exceeding cash or bonds through just about any point in 2000.

    Shorting tech in 1999-2000? Sounds rather rash. You’d have better off being long tech in 1999 and short in 2000. The Nax went from 2250 to 4000 in 1999. That must have hurt if you were short then. Maybe you made it all back in 2000 …

  10. Fred commented on Jan 10

    “From February 2004 until July 2006 — a period of about 2 and 1/2 years — the Dow was essentially flat (plus 1% per year).”

    Barry…I know you’re not a technition, but “the longer the base, the higher the race”…take a compass from the begining to the end of that consolidation (base), and you can pencil out a rather scary melt up.

  11. costa commented on Jan 10

    talk about climbing on wall of worry

  12. MarkTX commented on Jan 10

    “The general thrust of the post appears to be an overall market statement that returns on the index come in short bursts. Therefore, being “wrong” as a market timer, i.e., *generally* bearish on equities when the market is in one of its “up” moves, really really really hurts.”

    very, very, correct Bill

    my looking at the chart reveals

    -it is still going up

    -Oct To January in each of those years was the wrong time to be bearish

    – being bullish the rest of the time
    was not handsomely rewarded.

    Of futher note, being bearish the last quarter of each and every year for the last 20 years has been a very, very, very failed strategy.


  13. RW commented on Jan 10

    Since there was nothing in the original post that even mentioned market timing much less that that necessarily meant being out of the market, a comment attributing content and meaning that was not present could simply be dismissed as a non sequitur so I’m not sure what “relevance” or lack thereof has to do with anything. Even if interpreted as nonsensical however, such a comment WRT the original post was worth commenting upon in turn since equating bearishness with being out of the market doesn’t logically follow regardless of how the original post is construed.

    As to ’98, skepticism was certainly justified: look at just about any group of stocks other than the S&P 500, Dow or’s and they were all rolling over which is why some folks refer to the ’98-’00 period as a “stealth bear” market.

    As to shorting tech, got stung a bit when I started in late ’99 but made it all up and then some within the next few quarters. All this was only in my trading portfolio in any case, my strategic portfolio is much more pedestrian.

  14. Philippe commented on Jan 11

    Where are the economic borders of technical trades, computer tradings, and monopolies arrangements when related to equities markets and bonds markets?

    They are certainly not economics or financial analysis which are merely alibis for the equities markets where the arguments of last resort is the “market can remain irrational as long as you can remain solvent”, if profits are not there prices will be increased.

    When the equities markets turned to be financial ordeals for societies in 2001, the financial authorities jumped “after” to review analyst’s recommendations.
    Legal proceedings against analysts, brokerage firms were the marching orders of the time.
    This situation of monopoly, markets cornering becomes of more weight when it comes to government bonds as prices manipulation has ramification in the whole economies through interest rates and may lead to macro financial disasters and more prosaically deter bidders and holders of government bonds, deprive central banks from their monetary policies.
    In both cases the negative ramifications of such markets behaviours are ex post will become a long term deterrent and will never be solved through erratic policies and legal enforcement.
    The after math of the Japanese equities bubble in the eighties is still in the vivid memories of the domestic households; the demise of the technology sector is still enshrined in the NASDAQ graphic and a forceful march towards the previous peaks of the market’s indices is not going to entice more customers to the stock markets which will remain dubious for non insiders.

  15. Bill aka NO DooDahs! commented on Jan 11

    Yeah, RW, it’s a “stealth bear” that doubles your account equity.

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