100 Years of Stock Market History (log graph)

(Last updated October 2020)

In times of turmoil, such as during the 2008 financial crisis, I look for one of those big charts with an arrow that says, “You are here.” It is in that spirit that I offer the following long-term log graph summarizing over 100 years of DJIA (Dow Jones Industrial Average) performance / history. I will defer most of my analysis until later, and for this post rely mainly on what one of my statistics professors used to call “interocular trauma.”

Dow Jones 100-Year Stock Market History Chart

Dow Index 100-Year History Chart

Stock Market Performance Since 1900 Has Alternated Between Excitement and Disinterest

Above is a graph of stock market (Dow Jones) performance since 1900 (click on image to enlarge it). It shows year-end closing prices through 2019. (See Yearly Returns for a bar chart of the returns each year.) While some describe this history as
a steady long-term upward trend, you could also describe it as showing alternating periods of excitement and disinterest. For example, the periods from ’33 to ’65, and from ’82 to ’99 were periods of excitement. From ’33 to ’65 the average return was about 7% per year, plus dividends -- for a total of approximately 10%. From ’82 to ’99 the average return was about 15% per year, again plus dividends – though dividends in recent decades were significantly smaller than they were in earlier decades.

The Long Flat Periods

On the other hand, the 1905 close of 96 was not permanently eclipsed until 28 years later -- 1933; the 1965 close of 969 was not permanently eclipsed until 17 years later -- 1982. I use the word “disinterest” to characterize these long flat periods. (Note: This is a log graph. If you are not familiar with them, see About Stock Market Log Graphs.)

In the long term, you would expect that stock market performance should approximate the performance of the underlying businesses. Therefore, an obvious interpretation of the chart is that the stock market periodically gets ahead of itself by increasing faster than the underlying businesses, and then has to wait for the “real” value of the underlying businesses to catch up during the long, flat periods of “disinterest.” If that is the case, we could well be in another one of those periods of “disinterest” -- though when you’re actually in one of those periods, you may find other words more descriptive….

{October 2020 update: It appears that in 2008 we were indeed in another one of those flat periods, though a shorter one than the previous ones - at least so far. There is always the chance that we could experience a late reversion similar to the one experienced during the 1905-1933 flat period. 

It is interesting to note that the flat periods have occurred at Dow 100, 1000, and 10000. It could be that approaching those milestone closes generates so much interest and excitement that novice investors flood into the market and bid up prices. }  

Note: The above chart and discussion ignores the impact of inflation. To see the long flat periods adjusted for inflation, see 100 Years of Inflation-Adjusted Stock Market History. Warning: not for the faint of heart!

Adding the 25-Year Moving Average as a Support Level

The 25-year moving average can be a useful addition to the above graph. As discussed in Dow 25-Year Moving Average History, the market has very rarely fallen below its 25-year moving average. That is, historically this moving average has been a reliable support level during secular bear markets. That graph is updated infrequently, as appropriate.


Oh, what is “interocular trauma”? It was the late Professor Harry Roberts’ way of saying “it hits you right between the eyes.”

Recommended Reading:

Interactive Calculator
For those who would like to perform additional analysis, see my Stock Market Interactive Calculator. The calculator will automatically calculate the Dow's growth rate between any two years you input (e.g., average stock market return between 1982 and 1999, including dividends).

Other long-term perspective posts
100 Years of Treasury Bond Interest Rates: Similar perspective on interest rates.
Inflation-Adjusted Stock Market History: Like this post, but adjusted for inflation. And, another eye-opening perspective on "the long flat periods."
100 Years of Housing Price History: Graph of housing price index since 1900.
Comparing Housing vs. Stock Market Growth: shows long-term stock market growth including reinvested dividends (the chart above excludes dividends).
Dow Yearly Return History: bar graph of yearly total return (i.e., including dividends) beginning 1929.
Dow Price/Earnings Ratio History Since 1929 - Yearly Graph: Similar perspective on P/E ratio.

Closer looks at bubbles, alternating excitement/disinterest, & long flat periods
Chart of 1929 Stock Market Crash for a closer look at 1929-1932.
The 25 Best & Worst Yearly Stock Market Returns: a closer look at 1-year returns.
Borrowing Returns from the Future: the price of extraordinary current performance may be decreased future returns.
Dow Index Inflation-Adjusted Close History: Impact of inflation adjustment on the long flat periods.
The Composition of 10-Year Returns: additional perspective on the alternating excitement and disinterest phenomenon.
Irrational Exuberance: Robert Shiller’s book discussing the causes of bubbles, and presaging the bursting of the tech bubble in 2000.

For lists of other posts, by category, see the drop down list (mobile viewers) or tabs (computer viewers) just below the blog header at the top of the page. There are additional links in the sidebar if your device supports sidebars.

Copyright © 2011.             Last modified: 10/17/2020

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