The Dow/Dollar Ratio
For some long-term perspective, today’s chart illustrates the Dow adjusted for inflation since 1925. There are several points of interest. For one, when adjusted for inflation, the bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s. It is also interesting to note that the inflation-adjusted Dow is now a touch less than three times higher than where was in 1929 and a little over double where it was in 1965. Not that spectacular of a performance considering the time frames involved. However, the magnitude of the bull market of 1982 to 1999 (even when adjusted for inflation) was truly of historic proportions. While the Dow has recently been making new record highs on a non-inflation-adjusted basis, today’s chart does illustrate that on an inflation-adjusted basis the Dow still trades below its 1999 peak. Further proof that time is money.

What more can I say other than “I think it’s about time to start thinking about commodities…at least for the next 10-15 years”. An economic slowdown (which the short-term-minded world is so speculative about) would last about a year, even considering the most bearish predictions. This bull market in commodities however should last for over a decade. When you see stocks trending towards the green line, you’ll know to get out.

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