Vol. I, No. 2: 2. Investing: The Visual Market -- The Major Indexes: 1984

The table below shows the performance of the various indexes during the period, including the raw start levels, the most recent [6 NOV 2000] weighted level, highs & lows with their corresponding dates, and a series of statistical averages to help determine both the degree of fluctuation and the confidence interval. In addition, we've included a 1-year exponential growth projection based upon performance from 1984 to the present.

As you can see, back in OCT 1984, the Dow stood at just over 1190, with the S&P around 164, the NYSE just under 100, and the NASDAQ debuting at 246.20. Each of these figures are converted to 1.00 at this date. By early November of this year, our Dow index was up to 9.1981 [10952.2], while the S&P, NYSE, and NASDQ were up to 8.7496 [1436.51], 6.9948 [663.04], and 14.9180 [3672.82], respectively.

Weighted Performance of Major Markets: 8 OCT 1984 - 6 NOV 2000
	DJIA	S+P	NYSE	NASDQ	AVG
08-Oct-1984	1190.70	164.18	94.79	246.20	=1.0000
6-Nov-2000	9.1981	8.7496	6.9948	14.9180	9.9651
HIGH	9.8455	9.3036	7.1482	20.5062	11.7009
DATE of HIGH	10-Jan-2000	20-Mar-2000	28-Aug-2000	6-Mar-2000	8-Apr-2000
LOW	0.9769	0.9883	0.9866	0.9708	0.9806
DATE of LOW	3-Dec-1984	3-Dec-1984	3-Dec-1984	3-Dec-1984	3-Dec-1984
AVERAGE	3.7854	3.4534	3.0913	4.1455	3.6189
WKS. ABOVE AVG.	283	271	215	268	259.25
% of WKS ABOVE	33.6905%	32.2619%	25.5952%	31.9048%	30.8631%
WKS. BELOW AVG.	557	569	625	572	580.75
% of WKS BELOW	66.3095%	67.7381%	74.4048%	68.0952%	69.1369%
AVG. DEVIATION	2.0682	1.8600	1.4777	2.8475	2.0633
STD. DEVIATION	2.4911	2.3005	1.7859	3.9105	2.6220
CONFIDENCE [0.95]	0.1686	0.1557	0.1208	0.2646	0.1774
1-YR GROWTH PROJ	10.2364	8.9807	7.4750	12.1079	9.7000
GROWTH CHANGE	11.2876%	2.6416%	6.8644%	-18.8371%	0.4891%
TARGET LEVEL	12188.44	1474.46	708.55	2980.97

Each of our indexes reached its max high earlier this year, with, however, some considerable variation. The Dow peaked on 10 JAN at 9.8455 [11723], followed by the NASDAQ on 6 MAR at an astounding 20.5062 [5048.62], and the S&P on 20 March at 9.3036 [1527.46], just before the April Fool's spill. On the other hand, the NYSE did not peak until the August recovery when it reached 7.1482 [677.58].

As for averages, both the Dow and the S&P have spent about twice as many weeks below their respective averages than above them, with a slightly higher ration [2.2:1] for the NASDAQ, and a nearly 3:1 ratio for the NYSE. As for deviation, which can be viewed as a measure of volatility, somewhat similar to a beta, the Dow is closest to the average for all indexes, with both the S&P and the NYSE coming in under the average, and the NASDAQ, as might be expected from its rep for higher volatility, well above the average deviation. Likewise, the confidence interval, in addition to providing a margin for error, can also suggest volatility; and likewise, the same pattern holds, with the NASDAQ showing a much larger interval.

The last item in the table above is a sequence of figures for a 1-year projection based on exponential growth. Each index shows a positive return after 1 year with one notable exception -- the NASDAQ. Our indexes place the Dow a year from now at 10.2364 [12188.44], or more than 11% above its 6 NOV mark. Both the S&P and the NYSE also show positive gains in this projection, with indexes of 8.9807 [1474.456], or better than 2.5%, and 7.4750 [708.55], or better than 6.75%, respectively. The NASDAQ, however, weighs in at 12.1079, which would place it at an actual value of 2980.97, or almost 19% below its 6 NOV mark. [Note: By end of day on 13 NOV, the NASDAQ had fallen below next year's target for the first time this year, to 2966.]

Another way of viewing these weighted indexes is through weekly gains and losses. All figures are for Monday-Monday closes.

Weekly Percentage Gains & Losses
	DJIA	S+P	NYSE	NASDQ	AVG
MAX WKLY GAIN	6.7116%	7.3172%	7.3022%	18.9781%	10.0773%
DATE of GAIN	13-Mar-2000	12-Oct-1998	12-Oct-1998	29-May-2000	17-Jul-1999
MAX WKLY LOSS	-13.1704%	-12.1967%	-12.5118%	-25.3047%	-15.7959%
DATE of LOSS	19-Oct-1987	19-Oct-1987	19-Oct-1987	10-Apr-2000	01-Dec-1990
AVG. CHANGE / WK.	0.2881%	0.2808%	0.2509%	0.3625%	0.2956%
AVG. DEVIATION	1.5944%	1.5554%	1.4416%	1.8663%	1.6144%
STD. DEVIATION	2.1513%	2.0856%	1.9288%	2.7882%	2.2385%
CONFIDENCE [0.95]	0.1456%	0.1411%	0.1305%	0.1887%	0.1515%
AVG. ANNUAL RETURN	14.9831%	14.5993%	13.0443%	18.8502%	15.3692%

As you can see, unlike the highs in the previous table, the largest percentage gains over one week were split between 1998 and 2000, with better than 7.3% gains for both the S&P and the NYSE in mid-October of 1998. The Dow posted its biggest one-week gain in March of this year, with a better than 6.7% return, while the NASDAQ weighed in with an pretty astronomical one-week gain of nearly 19% in late May of this year, 2.5-3 times greater than the other indexes.

As for the downside, each of the indexes but the NASDAQ posted their greatest 1-week losses in mid-October of 1987, ranging from a 12% hit on the S&P, through a 12.5% hit on the NYSE, and a better than 13% hit on the Dow. The NASDAQ, on the other hand, posted its biggest 1-week loss about six weeks prior to its biggest gain, when it gave up more than one-fourth [25.3%] of its value in the week ending April 10th.

Just as with our weighted index figures, the averages for these weekly gains and losses also show the NYSE and the S&P to be the more stable indexes, with the Dow a close 3rd, and the NASDAQ, a somewhat distant 4th. And if we look at the rate of return, even if the most stable NYSE shows a healthy 13%, with the S&P coming in around 14.5%, and the Dow, just under 15%. The NASDAQ definitely shows a stronger return, at just under 19%. But one has to ask whether the added gains are substantial enough to outweigh the added risks of volatility and uncertainty.

The immediate answer would seem to be obvious. But when we tracked the NADAQ and the other indexes from the early 1999 recovery after the Q3-Q4 1998 dip, a very different picture of performance emerged.

While the Dow, he S&P, and NYSE weighed in with healthy overall gains of 13.57%, 12.66%, and 8.51%, the NASDAQ blew them all out of the water with a whopping 56.66% gain ... and that, even after the crash earlier this year, from which it has yet to recover. These figures mean that, while the Dow, S&P, and NYSE have shown annualized returns of 7.35%, 6.86%, and 4.61% for the period, the NASDAQ has earned a staggering 30.69%.

Whether or not the NASDAQ can sustain its phenomenal pace is anyone's guess, and market volatility would seem to suggest that that's precisely what many are doing -- trying to guess their way into small fortunes. Meanwhile, since we drew up the stats for this article, the NASDAQ has been falling toward the 3000 mark, giving up 15% in less than a week in the wake of shaky earnings reports and the lingering uncertainty about the election. Such swings are nothing new to the NASDAQ, and our 1-year growth projection, based on overall performance since its debut, places the NASDAQ below the 3000 mark.

Yet the prospect of strong technology sector growth long-term is certainly a tempting scenario, even in the face of periodic downturns and inevitable volatility. But as pundits have been saying for a while now, it is certainly not a market for either the conservative investor or the faint-hearted.

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