The Complete History of the Dow Jones Industrial Average

by on September 18, 2013 | Updated January 10, 2014 | ETFs Mentioned:

The Dow Jones Industrial Average is one of the oldest and most often-used benchmarks across the globe. Consisting of 30 of the biggest companies in the world, the benchmark has been through a lot since it was founded in the late 19th century. Here is a quick primer on the history of the DJIA, by the numbers:

Decade by Decade

The index has put in a dozen full decades with a few years to spare on the side. Over that time period the Dow has seen just three decades of negative returns, giving it a 75% chance of turning in a positive decade:

 

*2010s data as of 12/31/2013

While the above chart does well to outline some of the most prosperous and most catastrophic 10 year stretches, looking at the index’s annual price gives investors an idea of just how much it has soared in recent years:

Visualized another way, here’s a look at the daily performance of the Dow since its inception (note the significant increase in volatility in the late 20s and 80s):

Daily change DJIA

Here’s yet another way to look at the daily historical volatility of the DJIA:

Of the 642 sessions in which the Dow has moved by 3% or more, here’s the chronological breakdown:

The Best and Worst

Starting with monthly returns, we outline some of the impressive and most treacherous stretches the index has ever seen:

The DJIA has seen years where it has fallen as much as 52% and others where it has gained more than 80%:

Fun Facts

  • The Dow Jones Industrial Average Index was shut down from 7/30/1914 to 12/12/1914 because of World War I.
  • It took the index 31,728 days from its inception to cross the 1,000 mark. It took just 36 days to move from 10,000 to 11,000.
  • It would take just 35 of the Dow’s best sessions (by point gain) to go from 0 to its close on 7/31/2013 of 15,499.54. By contrast, it would take just 55 of the Dow’s worst sessions (by point losses) to bring that figure back to 0.
  • Since inception, the Dow has had just one down year that ended in a “5″, as it suffered a slight pullback in 2005.

The Dow has broken through a number of 1,000 point barriers in its lifetime. Here are the number of times it has surpassed each barrier:

The 11,000 barrier was clearly the hardest level for the index to hold as it first crossed in May of 1999 and would not firmly hold until November of 2011, the last time it was below that barrier. Below are the number of days it took the index to shatter each individual 1,000 point mark after initially reaching the previous 1,000 point level (note that 0-1,000 has been omitted for purposes of scale):

Index Growth

When it comes to investing, hindsight is always 20-20. Here is what you would currently have had you invested $100,000 at the beginning of the following decades:

Looking ahead, the DJIA averaged an annual growth of approximately 7.5% since inception, however that average was just 0.6% during the “Lost Decade”. Here is a look at where the Dow will be in 30 years given the aforementioned averages:

ETFs

While the DJIA itself is difficult to invest in, investors can easily utilize the Dow Jones Industrial Average ETF (DIA, A), the only fund to grant exposure to the standard DJIA. That fund has well over $12 billion in total assets, making it one of the largest and most liquids ETFs in the world.

All data as of 12/31/2013.

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Disclosure: No positions at time of writing.