http://www.financialsense.com/fsu/editorials/2007/0416.html

When I say buy or sell the Dow in this article, I'm just talking about value. I know that you can't actually buy or sell a share of the Dow. If you want to do that, you've got to use the Dow ETF (exchange traded fund) known as the Diamonds (stock symbol DIA)Â… In my opinion however, it's not a very good idea right now.

Here's the Dow Jones Industrial Average the way you're used to seeing it. It appears to have gone up because it is measured in dollars. However, it's up in price onlyÂ… not value! And now I'll prove it with the following charts.

In this chart I measure the Dow with money, not currency. It took almost 45 ounces of gold to buy 1 share of the Dow in 1999. Today it takes less than 19. Another way of saying it, if you sold 1 share of the Dow in 1999 you would have been able to buy 45 ounces of gold. Today if you sold 1 share of the Dow, the proceeds would only buy you 19 ounces of real money. So measured in real money, the Dow has crashed 58%.

Check the site out, pretty interesting.

Kieran

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TragicHipster's picture

RE: The Dow Charts

WR_Thunderstud's picture

RE: The Dow Charts

This is a good article.  They were talking about this on Kudlow and Co (CNBC 7PM) last night.  It mentions about halfway down that the S&P is worse and that it is actually a better broad market indicator since it uses 500 stocks instead of 30 like the Dow.  The Dow is skewed higher becuase it only tracks bigger companies that can better weather storms. The S & P better reflects mid-sized failures.
 
Speaking of which (and I know kirean digs austrian school stuff, mises.org has a 15% sale on all items plus some decent free lectures to replace some boring radio int he afternoon. I am reading their complete works of Bastiat now which is pretty readable for a 1850's French economist.
 
Greg 

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