Investing
The Visual Market
The Major Indexes:  1984 - Present

In an age of instant info and wild market fluctuations, we thought it might be interesting to look at the long term performance of a few of the major market indexes, as well as some averages & projections based on that performance.  In that light, last month. we looked at the Dow -- 1930 to the present -- with a 1-year projected growth curve.  {Click here to read last month's installment and view the chart.}  In this installment, we'll be looking at the performance of the major indexes -- the Dow, the S&P 500, the NYSE, and the NASDQ -- from the inception of the NASDAQ in October 1984 to the present [6 NOV 2000].

Viewing the Charts:  The charts were all compiled with Microsoft Excel from weekly market data for the specified periods.  The charts which appear on this, the main Visual Market page,  are not intended to be the best quality.  But for any fuzzy chart, you can simply click on it for the larger version [best viewed at 800x600 or better] ... or, if you'd like your own copy, simply right-click on the chart below and choose "Save Target As."  From there, you simply pick a folder on your computer where you'd like to save it. 

The Major Markets: 1984 - Present

This month's offering provides a chart of the major market indexes from the inception of the NASDAQ [week of 08 OCT 1984] up to the present [week of 06 NOV 2000].  At this start date, the Dow stood at 1190.7, the S&P 500 at 164.18, the NYSE at 94.79, and the NASDAQ debuted 246.2.  From there, we charted closings weekly instead of daily, in order to contribute to this long-view approach.

For each of the indexes, in order to make for easier comparisons between and among their relative performances, we divided the then-current level of an index by itself, so that each index begins at 1.0 on 8 OCT 1984.

Highlights:  

Correlations:  A few things stand out at first glance on the chart.  First off, all of the indexes appear to be fairly highly correlated from the 1984 start date up until the recovery from the 1998 slide, after which the NASDQ breaks away.

In fact, between OCT 1984 and the Q3-Q4 1998 slide, all of the major market indexes correlated at better than 0.99 with the Dow, viz., 0.9977 for the S&P, 0.9975 for the NYSE, and 0.9908 for the NASDAQ.  However, between the Q3-Q4 1998 slide and our 6 NOV 2000 end date, while the S&P and the NYSE continued to correlate with the Dow fairly strongly, at 0.9218 and 0.9264 respectively, the correlation between the Dow and the NASDAQ fell to 0.7220.  There are, of course, two common interpretations of the tech-heavy NASDAQ break-away:  On the one hand, some see it as a sign of 'The New Economy', while on the other, there are those who see it as a 'bubble' which has yet to burst.

Highs & Lows:  Among the more noticeable, and for most, well-remembered dips in the markets between 1984 and the present, four stand out -- the crash of '87, the recession during 1990-1991, the slide in Q3-Q4 1998, and, of course, the dramatic market turn-around of earlier this year.

We'll have more to say about these 'slides' in the next installment.  For now, however, we offer two ways to look at these weighted indexes -- through overall performance, and through weekly gains & losses.

CONTINUED ...

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Lou Colasanti, Editor & Laura Wisniewski, Associate Editor
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