Dow Jones 10 year data
- Thread starter Darryl Steight
- Start date
How does it look adjusted for inflation? We doubled the money supply in 2020, so the price of everything should double just to remain even.
+108% which doesn't take into account dividends.
The Dow Jones Industrial Average Total Return Index (^DJITR), accounting for price appreciation and reinvested dividends, has generated a nominal annualized return of approximately 13.0% over the past decade.
When adjusted for consumer price inflation (CPI-U), this real annualized total return reduces to roughly 9.6%.
Without accounting for dividends, the average annual return is 11.2%, or 7.7% after adjusting for inflation.
My son just turned 17 and is a couple of months into his first job. Many thanks to the poster here that helped make that happen. I'm trying to convince him to let me open him a custodial investment account. Told him I'd make a small deposit in it to start him off and then he could just contribute $10-$20 a paycheck. I then ran the numbers and showed him what that could look like in 20 years if he just left it alone and let it do its thing.
One thing that is kind of scary, the inflation-adjusted CAGR of the Mag 7 companies (Apple, Alphabet, NVIDIA, Amazon, Meta, Tesla, Microsoft) over that same window is 30.97%
The Mag 7 now accounts for over 60% of U.S. GDP at this point, which is, quite ironically, about the same % as all the big investment banks represented in mid-2008.
So, if the entire DJI only returned 9.6% annually, but companies representing over 60% of all U.S. productivity returned over 30%, what does that tell you about how the rest of the economy has been doing?
The entire economy of the USA is currently being propped up by the prosperity of a single digit number of companies that all reside in roughly the same sector. They’ve all been doing really well for awhile, god help us if something shifts the winds against them.
Vanguard’s latest 2026 model projects 4.2% to 6.2% nominal annualized returns for U.S. equities over the next 10 years. That’s nowhere near the ~15% annualized run the broader U.S. market has recently experienced. So stawks are still the ticket but don't expect the same gains that the iPhone, Nvidia and Amazon delivered. That run may very well never be repeated.
That created multiple bargains in other areas however. Stocks like General Mills, UPS, Ford and AT&T aren't remotely as sexy and sort of got left behind but they all carry healthy valuations now and are stalwarts in the economy.
They said that about the railroads in the early 1900s
oil and heavy industry in the 50s and 60s
Dot-coms in the 90s
etc.
Most stocks are flat to losers over time, and don't outperform a treasury bill. That's why S&P index funds kick ***. They are filled with winners, and when a winner fades, it gets replaced with the new winner. If you think the current kings are fading, then get an equal-weight index and let her ride.
Dot-com bubble is the closest relatable one to me. If you had internet in your company name or business idea, someone would throw $$$$ at it. Everybody and their brother were founding web development firms. Established companies fumbled around and wasted tons of money trying to do web things and doing them poorly. All that popped. The internet became a pervasive tool that is cheap it is cheap, almost effortless to toss up a website, with e-commerce built in.
Fast forward to today and if you have AI in your name or business plan, people will toss $$$$ at it. Everybody and their brother is blindly investing in AI, AI products, founding AI agent development companies, etc. It will pop. Many established companies will have wasted a ton of money trying to do something AI and do it poorly. Most AI agent development companies will wither and die. Creating task and business specific agentic AI will be easy and commoditized, and many of these data centers will shutter. You really can't be in equity funds and avoid the AI hit that investments will take.
An excellent point. It was marginally higher than their current forecast for the next 10 years, but it still missed (lower) bigly.
One possible caveat for the next 10 years is that their models have been updated and now they're probably making projections using trained AI. We'll see if that makes a difference.
The dot-com is model is basically m y model. We're going to end up with a lot of capacity that early investors take a bath on, and then we're all going to benefit from there being a bunch of cheap capacity that allows a lot of people to take a shot at turning it into a valuable service/product. And just like the 2000 bubble, there will be some companies that look astronomically expensive now that will still provide a solid to great return even if bought at the peak (Microsoft, apple, amazon), and others (intel, cisco, oracle) that will long term losers or provide very poor returns.
Just for comparison, the tech sector represented 34.8% of the market cap and 15% of the earnings at the peak of the .com bubble. Current tech represents almost half the S&P market cap and 35 to 38% of its earnings. So not as bad if you are looking at the comparison of earnings to market cap. But arguably worse in that it's an even bigger portion of the S&P500.
Not sure on those other names, but….Ford???
What are you seeing there that I’m not?
They are trading at the same place as they were this time in 2010, and have been for awhile. Revenues have grown at less than 2% annually for the past decade, WITHOUT adjusting for inflation. EPS has been negative for 3 straight quarters and declining in general for much longer than that.
The automotive sector in general is a horrible place to park money and expect any sort of decent return. Very low margin / low growth sector. All the profit is made on the dealership / private side.
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Yup, they're just too big and bureaucratic and without much of a market to grow, excluding developing markets where they have too much overhead to compete. If I'm going to go big and without growth opportunities, I'd probably do utilities. Airlines are another that seem terrible. They just seem destined to always compete each other into near bankruptcy.
ETA: Obviously TESLA hasn't been bad, but if you believe they're an automobile company then their stock price would have to drop who knows how much.
I bought most of my F stock in the 9.50 to 11.00 range which is where it typically sees resistance. Ford had an encouraging Q2 as adjusted profit rose nearly 20% and they raised 2026 guidance to $10–11 billion of EBIT. Their profitable truck/SUV business remains strong. They also have a much stronger dividend yield than GM. Depending on your entry point its a really solid long term part of a passive income portfolio.
A quick check of the chart shows that $9.50-$11.00 range was an available buy-in point for about 7-8 months in late 2024 and early 2025, and about 1 month in late 2023. Other than that, you’d not have much of an opportunity to get in at that price at any other time in the past 5 years.
Of course, you can always do decently if you buy the true bottom and also get a dividend bump. But that’s a lot easier said than done. I do agree they are a lot more appealing than GM, but I’m a hard pass on the whole sector outside of whatever trace holdings I have in index funds. If I’m going passive, I’d much rather just pull the current Berkshire holdings and wait for bargain prices on those.
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