Thursday, October 16, 2008

Dow Jones: Long-term Perspective

Don't get me wrong, the recent downturn in the equity market has been brutal (and appears brutal in the first chart below).

However, looking at that same DJIA data using a log scale (a log scale is a better method of showing long term compounded data), a different picture emerges. A picture in which equities appear to have grown above trend since the mid-1990's and may just be reverting back to its long-term average.