This Is Not 1982

The following chart shows the annual average of the Dow Jones Industrial Average adjusted for inflation (December 2013 dollars). It does not account for dividends (which over the long-term can be very important clearly).<br /><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjwijUz5ZTfrZr14_j7q4YVyxVYZKATsN1PtQciTFBmaKswtgtKuXiXJf9YgJmZLmqTUpqQH3StITEprGVxSipu9oGvqeu9EtwbFkZw8E_sxjHhGuj1dPpl_KAVJeWXFoaXEdvgm4hN0kk/s1600/This+Is+Not+1982.jpg" imageanchor="1"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjwijUz5ZTfrZr14_j7q4YVyxVYZKATsN1PtQciTFBmaKswtgtKuXiXJf9YgJmZLmqTUpqQH3StITEprGVxSipu9oGvqeu9EtwbFkZw8E_sxjHhGuj1dPpl_KAVJeWXFoaXEdvgm4hN0kk/s320/This+Is+Not+1982.jpg" /></a><br /><span style="font-size: x-small;">Click to enlarge.</span><br /><br />This is not 1982. We know this because the Dow Jones Industrial Average is not trading at roughly 1916 levels (adjusted for inflation).<br /><br />I'm just pointing it out for those who truly believe that this is 1982 and that a whole new era of American prosperity will soon be unleashed. That said, something may soon be unleashed (again). 1999 and 2007 weren't enough warnings?<br /><br />It is yet another ugly chart, but what's new? As a retiree, I'm generally a risk-off kind of guy, and that's got risk written all over it.<br /><br />1. Profit margins will stay permanently elevated?<br />2. ZIRP is guaranteed to work long-term?<br />3. The business cycle is dead so it's nothing but up from here?<br />4. There aren't any itchy trigger fingers hovering over sell buttons?<br />5. The Fed knows exactly what it is doing?<br />6. We can continue to borrow our way to prosperity forever?<br />7. America can never have too many restaurants?<br />8. The rise in Internet commerce won't <a href="http://www.businessinsider.com/shopping-malls-are-going-extinct-2014-1">hurt malls irreparably</a>?<br /><br /><div style="color: red;"><i>About 15% of U.S. malls will fail or be converted into non-retail space within the next 10 years, according to Green Street Advisors, a real estate and REIT analytics firm. That's an increase from less than two years ago, when the firm predicted 10% of malls would fail or be converted.</i></div><br />It takes a great deal of faith and/or hubris to answer a resounding "yes" to all those questions. I don't have enough faith to answer yes to any of them.<br /><br />This is not investment advice, but damn. Surely there were better times in all of recorded history to put money to work in the stock market.<br /><br /><b>Source Data:</b><br /><a href="http://research.stlouisfed.org/fred2/graph/?g=rJO">St. Louis Fed: Custom Chart</a>

This Is Not 1982

The following chart shows the annual average of the Dow Jones Industrial Average adjusted for inflation (December 2013 dollars). It does not...

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