Tuesday, March 1, 2011

March 2011 Stock Market Update

February, Year-To-Date & Recovery-To-Date Review
Note: Click here for April update with March 2011 stock market results

The market continues its remarkable recovery; in February the market again reached a multi-year high. The DJIA (Dow Jones Industrial Average) closed February at 12,226.34, after a late month pullback from its high close of 12,391.25 on February 18. The pullback was sparked by unrest in the Middle East and the resultant run-up in oil prices.

Here's a summary of the extent of the advances after this remarkable 2-year run:
  • From Prior Month Close of 11,892: The Dow is up 334 points (2.8%)
  • From December/EOY Close of 11,578: Up 649 points (5.6%)
  • From Recent Low of 9986 on August 26, 2010: Up 2241 points (22.4%)
  • From 52-Week Low of 9686 on July 2, 2010: Up 2540 points (26.2%)
  • From Crash Low of 6547 on March 9, 2009: Up 5679 points (86.7%)!

Note: See this post for 2010 stock market stats, plus 100-year chart.

The Last Hurdle
There is one benchmark that remains unsurpassed -- the all-time high.
  • From All-Time High of 14,164 on Oct 9, 2007: the Dow is still down 1938 points (13.7%)  
Note: For an explanation of how the Dow can be up over 85% and still be 14% below the all-time high, see The Importance of Avoiding Large Losses.

The Next 10 Years
In the first quarter of last year, my stock market projection model projected 10-year returns in the neighborhood of 5.5%. Last year's above-trend performance will reduce future prospects somewhat; my preliminary 10-year projection was in the neighborhood of 4.7%.  Since my model is earnings based, I'll have to wait for 2010 earnings data before finalizing the projection.  I'll post a formal update around the end of the quarter.

Related Posts

100 Years of Stock Market History: Includes 100-year chart and discussion of the long flat periods.
Dow Yearly Returns: 1929-2010 : bar graph of yearly total returns (i.e., including dividends)
What has the range of returns (minimum & maximum) been for 1,2, 3, ... 100-year periods?
10-Year Stock Market Projection shows how expected returns have changed over the last 10 years.
100 Years of Interest Rate History: graph of Treasury Note interest rates since 1900
Who's Afraid of a Sideways Market?: Interesting perspective on long flat periods from Morningstar.
For lists of other popular posts and an index of stock market posts, by subject area, see the sidebar to the left.

This work is licensed under a Creative Commons Attribution 3.0 unported license. Last modified: 4/1/2011

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  1. I am really Impressed with the collection of the data. I think that the analysis that you have made are spot on. The analysis of the variation in the P/E is very near to discovering why there are wild swings in asset values in a market (irrational exuberance?)

  2. Thanks for stopping by; so glad you've found the posts helpful.

    It's probably worth mentioning that the "wild swings in asset values" are not necessarily related to changes in P/E ratio per se. I expect I'd get similar results if I used any reasonably consistent measure of value (e.g., dividends, normalized cash flow, replacement cost, ...). The real value of the businesses doesn't change anywhere near as much as the values assigned by the stock market.

    I hope you'll continue to visit -- I'm excited about the posts planned for this year. I just hope I can find the time to complete all of them!


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