Sunday, September 2, 2012

August 2012 Stock Market Update

Stock Market (DJIA) monthly performance / closing prices for last 12 months
Dow Index Monthly Closes Through August, 2012

The Quiet Before The Storm?

The lack of volatility continued in August. During the whole month, there was exactly one day when the Dow was up or down by one percent or more. Near mid-month, the VIX, a measure of volatility, sank to a five-year low of 13.45.

In the face of some well-documented and continuing domestic and international issues, the stock market just keeps plodding along -- creeping ever upward. The market has been up in 10 of the last 11 months. Mainly, it's a little here, a little there. However, it all adds up. During the eleven months the Dow has increased 20%.

Dow Reaches Milestone

As a result, believe it or not, the Dow has
now doubled since the crash low of 6,547 in March of '09. Since then, the Dow is up 6,544 points. (Ok, so technically it hasn't doubled yet, but close enough....)

The DJIA (Dow Jones Industrial Average) closed August at 13,090.84, up 0.6% for the month (see chart above. Click to expand). Ten-year treasury rates ended the month almost exactly where they started -- at about 1.6%.

Where Are We Now? August, Quarter & Year-to-date, and Recovery-To-Date Review

Here's where we stand vs. some key dates and milestones:
  • From All-Time High of 14,165 on Oct 9, 2007: the Dow is down 1074 points (7.6%)  
  • From Crash Low of 6547 on March 9, 2009: Up 6544 points (100%)
  • From one year ago close of 11,614 in August, 2011: the Dow is up 1477 points (12.7%)
  • From the 52-Week Low of 10,655 on October 3, 2011: Up 2436 points (22.9%)  
  • Year-to-Date From 2011 close of 12,218: The Dow is up 873 points (7.1%)  
  • From the 52-Week High of 13,279 on May 1, 2012: down 188 points (1.4%)
  • From 2nd Quarter Close of 12,880: up 211 points (1.6%)
  • From Prior Month Close of 13,009: up 82.2 points (0.6%)
Note: At the end of the crash, the Dow had lost about 54% of its value (from the all-time high). For an explanation of how it can be up 100% since then and still be below the all-time high, see The Importance of Avoiding Large Losses.

The Next 10 Years

My stock market projection model continues to project below average 10-year returns. The "official" 2012 10-year projection as of January was for 5.6%/year for the next 10 years. As of the end of August, my interim/monthly model estimates returns closer to 5% per year.

Related Articles & Posts

100 Years of Stock Market History: Bigger perspective on "Where are we Now?." Includes 100-year chart and discussion of the long flat periods.
Dow Yearly Returns: 1929-2011 : 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
Where Are Interest Rates Headed? My methodology & spreadsheet for forecasting interest rates.
Who's Afraid of a Sideways Market?: Interesting perspective on long flat periods from Morningstar.
CBO report warns of U.S. falling off 'fiscal cliff' from USA Today.
For lists of other popular posts and an index of stock market posts, by subject area, see the sidebar to the left or the menu bar at the top.
Copyright © 2012. Last modified: n/a

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  1. Why do you use the DJIA and 'the stock market' interchangeably? They are not the same! I can't tell what numbers you're giving in your analysis.

    1. You're right, of course, the Dow and the stock market are not the same thing. However, I think it's clear from the context that I am using them interchangeably. More precisely, I am using the Dow as a proxy for the stock market.

      My numbers are always Dow numbers unless I specifically say to the contrary.


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