On 2013-02-01, F George McDuffee wrote:
On Sun, 27 Jan 2013 21:42:13 -0600, Martin Eastburn
wrote:
snip
The big lie is simply a lot of the companies that went bust were
in the Dow and they were replaced with other companies.

In other words - the books have been cooked - slowly but the name
never changed.

Should be the New Dow or the 2012 Dow..... Dow12 maybe now the Dow13.
snip
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Even if there were no change in the composition of the Dow,
this neglects the effects of inflation.

Dow 14000

Oct 2007 CPIU 208.936
http://www.bls.gov/news.release/arch...i_11152007.pdf

Dec 2012 CPIU 229.601
http://www.bls.gov/news.release/pdf/cpi.pdf

Inflation C/F 1.0989058851

Oct 2007 Dow
in Dec 2012$ 15384.68

In inflation adjusted terms a 14,000 Jan 2013 Dow,
neglecting change of component companies, is down 9%
compared to a 14,000 Oct 2007 Dow.

When the combined effects of the change of base and the
understating ("adjustment") of the CPI-U are considered, the
shortfall is much greater. Unless you own a brokerage or
are a broker, the market is a sucker's game.

Keep in mind that the Dow is net of dividends.

Assuming it was 4 percent for the years discussed, the dividend yield
would have added about 25% to the above discussed return. 25% minus 9%
is 13 percent return, which is not much to brag about, but better than
one would get from banks. The calculation is not quite exact.

For an in depth discussion of this, read this article:

http://online.wsj.com/article/SB1000...285657442.html

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