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Historical Dow Jones Industrial Average Return Rate vs. National Debt Growth Rate
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DJIA Return Rate
Simultaneous Change
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DJIA Return Rate
Subsequent Change
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1% Rise in National Debt Growth Rate in 1 Year
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1% Fall in National Debt Growth Rate in 1 Year
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(from 5% to 6% for example) has typically been accompanied by a 2.12% Historical
Dow Jones Industrial Average Return Rate increase during that year and a 0.30%
Historical Dow Jones Industrial Average Return Rate decline the following year.
It also indicates that a 1% National Debt Growth Rate decline over a 12 month period,
(from 5% to 4% for example) has typically been accompanied by a 2.23% Historical
Dow Jones Industrial Average Return Rate decline during that year and a 0.54%
Historical Dow Jones Industrial Average Return Rate increase the following year.
The center column shows the change in the Historical Dow Jones Industrial Average
Return Rate over 12 months, depending on whether the period experienced a rising
or falling National Debt Growth Rate. The right column shows the change in the
Historical Dow Jones Industrial Average Return Rate during the year following an
increase or decrease in the National Debt Growth Rate.
The data history in the middle column shows a strong tendency for the two
rates to move in the same direction during the same time period.
The evidence for using the previous 12 month change in the National Debt
Growth Rate to predict the future direction of the Historical Dow Jones
Industrial Average Return Rate is significant (right column). However, the
direction of the rates are inversely related to each other. A change in the
National Debt Growth Rate suggests that the Historical Dow Jones Industrial
Average Return Rate will move in the opposite direction of the National Debt
Growth Rate.
Annual rates are shown in the graph and calculations.
How Do I Use This Information?
There are many investment theories that are well publicized in the financial press.
Even though little or no historical data may be offered as evidence for such theories,
many investors use them subconsciously, if not intentionally.
Example Theories: Rising Inflation is bad for the stock market. A booming housing
market is good for the S&P 500 stock index. A falling fed funds rate means that long
term interest rates will fall.
There are many such theories. In this site, long term investment and economic data
is tested against decades to determine whether a relationship actually exists or not.
This historical correlation provides a vital aid in interpreting the often confusing
behavior of the financial markets. The perspective gained may be the difference
between staying the course or being blown and tossed by every investment theory
that is popular at the moment. What the majority assumes to be true, often is not. In
the final analysis, readers are admonished to follow the evidence, wherever it leads.
This page tests the relationship between the National Debt Growth Rate and the
Historical Dow Jones Industrial Average Return Rate. Suppose you are making a
business or investment decision. Suppose again that the decision hinges on whether
the National Debt Growth Rate and the Historical Dow Jones Industrial Average
Return Rate tend to move in the same or opposite directions. The data, graphs, and
analysis above will enlighten you. You'll discover whether they move with, inversely to,
or independently of each other.
Suppose that the National Debt Growth Rate has risen sharply and that you need to
know what direction the Historical Dow Jones Industrial Average Return Rate is
headed in the near future. Does the recent increase in the National Debt Growth Rate
provide a clue about the future direction of the Historical Dow Jones Industrial
Average Return Rate? The data history, graph, and analysis above will show you how
the Historical Dow Jones Industrial Average Return Rate has performed after
increases in the National Debt Growth Rate. You'll see if one indicator has been likely
to signal a change in another. This is not intended as a prediction, but merely as a
clue to the future from the annals of history. No man knows the future, unless he has
the ability to control the future.
This site compares data series for interest rates, stock indexes, economic indicators,
currency exchange rates and real estate values. Suppose that you want to see how
stock indexes are influenced by interest rates or the value of the dollar. Click one of
the stock index links on the right side of any page. Links to our multi-series graphs
and correlation analysis may be found at the bottom-center of the stock index pages.
Formula for periods with a rising National Debt Growth Rate:
1) Change in the Historical Dow Jones Industrial Average Return Rate DURING
periods with a rising National Debt Growth Rate:
The abbreviated formula is: (Historical Dow Jones Industrial Average Return Rate
Change / National Debt Growth Rate Rise) x 1% = Published Rate.
The complete formula is: [(Average change in the Historical Dow Jones Industrial
Average Return Rate over all rolling 12 month periods with a rising National Debt
Growth Rate) / (Average Rise in the National Debt Growth Rate over the same 12
month periods)] x 1% = Published Rate.
2) Change in the Historical Dow Jones Industrial Average Return Rate AFTER a rising
National Debt Growth Rate:
The abbreviated formula is: (Subsequent Historical Dow Jones Industrial Average
Return Rate Change / National Debt Growth Rate Rise) x 1% = Published Rate.
The complete formula is: [(Average change in the Historical Dow Jones Industrial
Average Return Rate during the 12 months following any rolling 12 month base
period with a rising National Debt Growth Rate) / (Average Rise in the National Debt
Growth Rate over the 12 month base periods)] x 1% = Published Rate.
Formula for periods with a declining National Debt Growth Rate:
1) Change in the Historical Dow Jones Industrial Average Return Rate DURING
periods with a declining National Debt Growth Rate:
The abbreviated formula is: (Historical Dow Jones Industrial Average Return Rate
Change / National Debt Growth Rate Decline) x -1% = Published Rate.
The complete formula is: [(Average change in the Historical Dow Jones Industrial
Average Return Rate over all rolling 12 month periods with a declining National Debt
Growth Rate) / (Average decline in the National Debt Growth Rate over the same 12
month periods)] x -1% = Published Rate.
2) Change in the Historical Dow Jones Industrial Average Return Rate AFTER a
decreasing National Debt Growth Rate:
The abbreviated formula is: (Subsequent Historical Dow Jones Industrial Average
Return Rate Change / National Debt Growth Rate Decrease) x -1% = Published Rate.
The complete formula is: [(Average change in the Historical Dow Jones Industrial
Average Return Rate during the 12 months following any rolling 12 month base
period with a declining National Debt Growth Rate) / (Average decline in the National
Debt Growth Rate over the 12 month base periods)] x -1% = Published Rate.
Rolling 12 Month Periods Defined:
Overlapping 12 month periods in a monthly data base.
For example:
In the 24 month period included in 2000 - 2001, there are 13 complete rolling 12
month periods. The first is January, 2000 - December, 2000. The second is February,
2000 - January, 2001. The third is March, 2000 - February, 2001 and so on. The last
complete rolling 12 month period in the 2000 - 2001 period is January, 2001 -
December, 2001.
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