Wednesday, March 6, 2013

Dow Jones About 10 Percent Below The Inflation Adjusted High of October 2007: S&P500 About 12 Percent Below Its Inflation Adjusted Closing High

Posted by Milton Recht:

Yesterday, March 5, 2013, the Dow Jones Industrial Average closed at a new all time nominal closing high of 14253.77. The previous high close was in October 2007. On an inflation adjusted basis the Dow Average needs to rise by another 9.8 percent to equal its October 2007 closing high.

On October 9, 2007, the Dow Jones Industrial Average closed at 14,164.53. On October 11, 2007, the Dow Jones Industrial Average had an intraday and previous all time high of 14,198.10. On an inflation adjusted basis, the previous Dow Jones Industrial Average closing high is equivalent to 15,644.16 in today's dollars and the previous intraday high is equal to 15,681.40.

S&P 500 Index

The S&P 500 Index needs to gain about 12.3 percent to reach a new high on an inflation adjusted basis.

On October 9, 2007, the S&P 500 Index closed at 1565.15. In inflation adjusted dollars, the closing high is equal to 1728.65. On October 11, 2007, the S&P 500 Index had an intraday high of 1576.09. In today's dollars, the closing high equivalent is 1740.73.

The monthly CPI index from the Bureau of Labor Statistics was 208.5 at the beginning of October 2007 (September 2007 index value). The latest CPI index value is 230.28, reflecting the value through January 2013. The inflation factor to convert October 2007 values to the most currently available inflation values is 1.1045. It is computed by dividing the CPI current index value, 230.28, by the beginning of October value, 208.5.

1 comment :

  1. There is much writing lately about record highs of the Dow and the S&P -- and some of this writing does it soundly, that is, on a REAL basis. But long-term real histories are seldom shown:
    Thus, kept out of sight are real highs that are evidently maxima of IRRATIONALITY -- return to which may well be mispricing revisited.
    A picture is worth 1000 words, so NO pictures!