Dow Industrials

[wavery]

I'm just curious what people on PUT feel the DOW is worth.

Just pick a # on the pole. Post your logic, if you'd like....

Here's a chart for 1945 - present..

[brainpause]

4000, because of the off the chart boom after that. The slope of the curve is precipitously high after that.

Larry

[coach]

currently?

It constantly changes, ~7500 at todays closing, that's what folks are trading for it!

[wavery]

currently?

It constantly changes, ~7500 at todays closing, that's what folks are trading for it!

6 months ago people were trading @ 14,000. It's now obvious that it wasn't "Worth" 14,000. What I would like to know is what you feel it is "Worth".

I realize that it isn't as easy as looking at a chart but consider this:

IMO....Our economy is far worse now than it was in 1985 but the DOW was at 1200 in 1985.
 
If you would consider average growth stayed the same as it was from 1945 - 1985, the DOW would be approx 2400 today. Now, you have to ask yourself, what is the biggest contributing factor to the phenomenal, unprecedented growth from 1985 - 2009?? ........I'll tell you my opinion (for what it's worth)....it is purely the communication boom in general but the internet in particular. So, one must ask themselves........how does the communication boom effect industry and what value would be realistic as it pertains to profitability of all DOW businesses? The answer is....a lot (whatever that means).
 
However, one must also ask themselves....does this communication phenomena account for a 1,000% increase in business values? The average year over year increase of the Dow was 5% prior to 1985. So.....let's say that we put a value on the communications phenomena and say that businesses (at average) have doubled their profitability over time and the increase should be be 10% instead of 5% year-over-year.
 
Take 1985 Dow 1200 and project that out at a whopping 10% increase year-over-year and we would have a Dow 4556....at the end of 2009.
 
DOW 14,000 was a year-over-year increase of 20%. That was an absolutely unsustainable increase beyond anyone's imagination. That is why we had Enron and others popping up steeling free $ that was illogically being stuffed into the stock market well beyond it's real value.
 
Now, I hope that you understand why I feel that the market must go to 6500 or below before it can possibly be considered a viable investment opportunity. The fact is, industry is really far worse off than it was in 1985. If you draw a straight line of the good old 5% increase that was considered "healthy" growth at one time, the market should be below 2376 today. Anything beyond that would call for extraordinary inflation because profitability just isn't there.

All JMHO.....

[wavery]

6 months ago people were trading @ 14,000. It's now obvious that it wasn't "Worth" 14,000. What I would like to know is what you feel it is "Worth".

I realize that it isn't as easy as looking at a chart but consider this:

IMO....Our economy is far worse now than it was in 1985 but the DOW was at 1200 in 1985.
 
If you would consider average growth stayed the same as it was from 1945 - 1985, the DOW would be approx 2400 today. Now, you have to ask yourself, what is the biggest contributing factor to the phenomenal, unprecedented growth from 1985 - 2009?? ........I'll tell you my opinion (for what it's worth)....it is purely the communication boom in general but the internet in particular. So, one must ask themselves........how does the communication boom effect industry and what value would be realistic as it pertains to profitability of all DOW businesses? The answer is....a lot (whatever that means).
 
However, one must also ask themselves....does this communication phenomena account for a 1,000% increase in business values? The average year over year increase of the Dow was 5% prior to 1985. So.....let's say that we put a value on the communications phenomena and say that businesses (at average) have doubled their profitability over time and the increase should be be 10% instead of 5% year-over-year.

I also find it interesting that the "irrational exuberance" escalated in 1995-96 when internet trading started.
 
Take 1985 Dow 1200 and project that out at a whopping 10% increase year-over-year and we would have a Dow 4556....at the end of 2009.
 
DOW 14,000 was a year-over-year increase of 20%. That was an absolutely unsustainable increase beyond anyone's imagination. That is why we had Enron and others popping up steeling free $ that was illogically being stuffed into the stock market well beyond it's real value.
 
Now, I hope that you understand why I feel that the market must go down further before it can possibly be considered a viable investment opportunity. The fact is, industry is really far worse off than it was in 1985. If you draw a straight line of the good old 5% increase that was considered "healthy" growth at one time, the market should be below 2376 today. Anything beyond that would call for extraordinary inflation because profitability just isn't there.

All JMHO..............

[saltysenior]

to me, the whole problem began w/ people making money off of money...and it worked very well,but now the smit hit the 12v fan...

[Old Goat]

The recent actions of congresss in shoving the Stimulus bill down our throats, without even reading or knowing what all is in it, will not spur the economy for any length of time, if at all. The market will probably continue a downward trend and where it stops is anybody's guess. It will rebound like it always does in time but when is another guess. Like a department store having an end of season sale with great bargains, the market, right now, also has plenty of great bargains in good stocks for those who are willing to gamble and jump in for the long haul..Market not viable? I don't think so...

[coach]

One can certainly suggest the market was not as efficient in the early days, meaning they were not enough folks involved. Could you be extrapolating from to low of a number?
What about the changes is demand. When the market got to 14000, there was demand. Over time the, pensions funds and baby boomers and insurance companies and ... need a place to park there funds. That's one big increase in demand.

It's not like buying a PU, one doesn't have much leeway in the price now nor can you buy used! I'll never own a new PU or trailer since I don't feel they are WORTH it. I go buy into the DOW at almost every price. VTI, SPY, DVY, RSP and a few forgien market ETFs.

Maybe if all the unproductivbe green spending had never happened and that money had gone to ...

[AustinBoston]

It is worth what people pay for it.  Whether it makes sense or can be justified is virtually irrelevant.  The stock market is about as close as we get to pure supply-and-demand anywhere.

When companies are thriving (and they will again), but the stock market continues down (or skyrockets unreasonably), it's the reason that is flawed, not the price of the market.

Austin