Monday, December 10, 2007



I happened to look at the 10 year stock chart given by AOL. I looked at a comparison of the DJIA & NASDAQ.

Starting with both stock averages exactly 10 years ago (Dec 1997):

1 - In early 2000 NASDAQ had more than tripled. Most of that increase came in just a few months from late 1999 up to the peak in 2000. The DJIA was up just 40%.

2 - Around the end of 2001, both averages were back to their Dec 1997 value.

3 - NASDAQ dropped to about 20% below its initial value. DJIA never got much below its initial value.

4 - Both averages began to climb around 2003.

5 - Both averages are now about 80% above their 1997 values.

6 - From around 2003 to now the DJIA and the NASDAQ (relative to their Dec 1997 values) have been almost exactly the same. (So much for diversifying your portfolio by including both NASDAQ & DJIA.)

Whether you invested in DJIA 10 years ago or NASDAQ (assuming your portfolio was exactly the same as the stock average) your percentage gain (ever since 2003) would have been exactly the same!

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