As the saying goes, "One picture is worth a thousand words." This one might be worth several thousand (click to enlarge; in case it isn't clear, the light blue line is oil, the darker line is the Dow). What it shows is the cumulative daily percent change in the Dow Jones Industrial Average and the same calculation for New York Mercantile Exchange crude oil futures, from Jan. 22, 2001, through last Tuesday (the most recent date for which the U.S. Department of Energy could provide crude prices).
In other words, the chart shows what an equal investment in the Dow and in oil would have returned on any given day since then, up to last week. Obviously, except for the first three years, oil would have been a much better investment than the stock market. Even after the steep decline from last summer's all-time high (when oil was up a staggering 65 percent while the Dow was up a piddly 9 percent), it's still up 29 percent overall. As of Monday's close, the Dow is down 5.5 percent over the same period.
The significance of the starting date, of course, is that it was the first trading day after George W. Bush was sworn in as president.
2 comments:
That's a very interesting chart. I suppose a smart person might have just gone with the flow when W. was elected, invested in oil futures and made a fortune.
In keeping with the I Ching theme of last week, I consulted the Oracle yesterday about the election and the future direction of our country. The Oracle said that Diversity will advance to Brightness. "After Darkness (the Bush Years?)comes attaching to each other and to Brightness."
Assuming that means Obama will prevail, what industries/investments do you think will do well over the next 4-8 years?
I could say facetiously that with the impending handover of power in Washington, I'm bullish on paper shredders. However, the truth is that I'm not able to give specific investment advice or recommendations. For one thing, I don't have the requisite licensing or certifications. But also, my interest in the markets and economy is in how they reflect the innate order of existence, and how the prevailing economic philosophy or conventional wisdom is in conflict with that order. I apologize if I've created any false expectations with my remarks on these topics.
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