Decades of Negative Returns: A Long-Term Look at the Dow

October 12, 2008

With the severe market decline this past week, the 10-year percentage change for the Dow Jones Industrial Average (($DJI)) has fallen to single digits, and it appears likely that we could head into negative territory in the weeks to come.

A long-term historical look at the Dow since 1910 finds that ten-year periods of negative returns are not so unusual. They occurred in 1915, during the Great Depression years, and then during the severe recessionary period in 1974. Both the 1930s episode and that beginning in 1974 lasted a number of years: once 10-year performance went negative, it stayed that way for quite a while.

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