IQS Research Brief - The Long Slow Dow!

Our latest IQS Research Brief looks at the DJIA and tries to answer the following 2 questions:

When the DJIA crosses an index level (e.g. 10000), how many times does the DJIA close above that level (when the day before it closed below that level)? Furthermore, how many months or years (what we call duration) is the time from the first crossing to the last crossing (it’s probably a lot longer than you think)? For instance, the DJIA first closed above 10000 on March 29, 1999, and closed just above 10,000 (while closing below the previous day) 34 times so far, with the last one being on August 27, 2010. This represents over 11 years back to the 10000 level from when it first closed above 10000!

Another topic we analyze in this IQS Research Brief is the notion that the US Equity Market (DJIA as the proxy) is a good investment at almost any price level. It is generally considered that long-term the market rises roughly 8% per year. In fact, many pension funds incorporate a long-term asset return assumption of 8-10% or more. We will look at returns over various historical periods for DJIA and test this tenet.

The Long Slow Dow.pdf

As always, we welcome your comments, or suggestions for future topics.