Check: The Dow Jones Industrial Average vs. Bananas
by Simon Black: Trust
Me, This Time Is Different…
From Santiago, Chile
The Dow Jones
Industrial Average, one of the key benchmarks of the US stock market,
has soundly surpassed its all-time high. And most of the investing
world is toasting their collective success and celebrating the recovery.
funny thing, really. Most investors only think in terms of nominal
numbers, i.e. Dow 14,000+ is 40% higher than Dow 10,000 (back in
November 2009). But few think in terms of real numbers
that inflation exists. We can all look back on prices from the past
and realize instantly how much more expensive things have become.
Conversely, though, most people dont think about the stock
market like this.
is, though, that when you adjust for inflation, the Dow is well
below its highs from over a decade ago.
I thought Id
put this into a bit of perspective.
for example. Based on USDA retail price data, today the Dow will
buy you 3,332 pounds of beef in the supermarket. This sounds like
a lot. But its actually about 20% less than the 4,046 pounds
of beef the Dow would buy back in December 1999.
And if beefs
not your thing, lets look at fruit. Based on the wholesale
price of bananas, the Dow currently buys you a whopping 15.35 tons
of the tropical fruit.
But this is
exactly the same amount of bananas the Dow would buy back in February
2008, when the Dow was just 12,266. And its a massive 60%
drop from June 1999 when the Dow bought 38.51 tons of bananas.
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© 2013 Sovereign Man
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