Dow 10,000 is meaningless

Arthur Cashinof UBS Financial Services, wears his Dow 10,000 hat on the floor of the New York Stock Exchange, Tuesday Oct. 14, 2008.

From a balcony at the New York Stock Exchange, Richard Grassothe exchange’s then-chairman, New York City Mayor Rudolph Giuliani gaveled the session closed and tossed commemorative blue hats emblazoned with “Dow 10,000″ into crowds of eager traders at the closing bell.

U.S. stocks are denominated in dollars per share. As the dollar continues to devalue, Dow 10,000 today will no longer be comparable. Comparing price levels denominated in debasing (devaluing) currency is like measuring distance from a yardstick that has a quarter inch removed each year. A yard measured today will be two and half inches shorter than one measured ten years ago.

Using similar logic, Dow 10,000 today is no longer comparable to Dow 10,000 of March 1999, because the dollar (yardstick) is not constant over time.

Dow Industrial Average (DJIA) 1897-present:


This relatively simple concept reveals the illusion of growth from currency debasement. A concept that is so easily missed by the public that debasement has been apart of the official/unofficial policy handbook for thousands of years.

Historical stock price comparison require a stable yardstick or currency. Does Dow 10,000 today compare with that of 1999? The Dow Jones Industrial Average to Gold ratio, or Dow priced in ounces of gold says absolutely not!

Dow Jones Industrial Average (DJIA) to Gold Ratio:


Source: blogs.wsj.com