Archive for the ‘DJIA’ tag
Down 10%, Up 11%, We Still Lose
After your investment portfolio has taken a beating, it is important to remember to keep positive news in context. In the past 52 weeks ending October 10, 2008, the DJIA has plummeted from a high of 14,118.50 to a low of 7,882.51. On a percentage basis the loss in value from peak to trough is over 44%. To get back to the peak however, will require an increase of over 79%! Simply because the bases on which the percentages are calculated are so different in size. At a compounded annual growth rate of 10% per year, it will take the Dow Jones until 2015 to fully retrace.
(If my stock is down 10% on one day and up 11% on the next, I am still out 0.1%.)
Procerity’s Prognosis: There is still the risk that interbank lending will not be restored any time soon.