Dow Jones Industrial Average (Log2)

The Dow Jones Industrial Average has gone up quite a bit in the last 100+ years. It looks like a hockey stick of growth with some sharp crevices.


However, if you use a logarithmic scale it looks alot straighter. (logarithmic means that the Y axis isn’t linear but exponential. Notice the numbers on the left of both graphs.)



Exponential growth is very good. It doesn’t always last forever, but this one has lasted over a hundred years. If you look closely, you may notice a few things.

  1. There are periods of steep growth (1940-1960) and periods of flat (1960-1980).
  2. It seems every 20 years the pattern repeats. (1980-2000 growth) and (2000-present flat)

Maybe the DJIA will be flat for another 5 years with a 20 year period of growth? It’s not a ridiculous interpretation of the chart.

Do you see a pattern or is it random?

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