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Dow Jones Index History
Dow Jones Index Return Rate / Corporate Cash Flow Growth Rate
1/50          1/1960            1/1970            1/1980           1/1990             1/2000            1/2010            1/20
The 12 month Dow Jones Index Return Rate, is shown in gray. The rate is based on the DJIA monthly
close, excluding dividends. DJIA refers to the Dow Jones Industrial Average. The annual US Corporate
Cash Flow Growth Rate is plotted quarterly in green. Other two-data-series graphs are available. See
links at the bottom of each page.
Dow Jones Index Return Rate vs. Corporate Cash Flow Growth Rate
 
DJIA Return Rate
Simultaneous Change
DJIA Return Rate
Subsequent Change
1% Rise in Corp Cash Flow Growth Rate in 1 Yr
+0.33%
-0.54%
1% Fall in Corp Cash Flow Growth Rate in 1 Yr
-0.30%
+0.57%
What does the table mean?
It indicates that a 1% Corporate Cash Flow Growth Rate increase over a 12 month
period, (from 5% to 6% for example) has typically been accompanied by a 0.33% Dow
Jones Index Return Rate increase during that year and a 0.54% Dow Jones Index
Return Rate decline the following year.

It also indicates that a 1% Corporate Cash Flow Growth Rate decline over a 12 month
period, (from 5% to 4% for example) has typically been accompanied by a 0.30% Dow
Jones Index Return Rate decline during that year and a 0.57% Dow Jones Index
Return Rate increase the following year.

The center column shows the change in the Dow Jones Index Return Rate over 12
months, depending on whether the period experienced a rising or falling Corporate
Cash Flow Growth Rate. The right column shows the change in the Dow Jones Index
Return Rate during the year following an increase or decrease in the Corporate Cash
Flow Growth Rate.

The data history in the middle column shows a significant tendency for the
two rates to move in the same direction during the same time period.

The evidence for using the previous 12 month change in the Corporate Cash
Flow Growth Rate to predict the future direction of the Dow Jones Index
Return Rate is significant (right column). However, the direction of the rates
are inversely related to each other. A change in the Corporate Cash Flow
Growth Rate suggests that the Dow Jones Index Return Rate will move in the
opposite direction of the Corporate Cash Flow Growth Rate.

Annual rates are shown in the graph and calculations.



How Do I Use This Information?
There are many investment theories that are well publicized in the financial press.
Even though little or no historical data may be offered as evidence for such theories,
many investors use them subconsciously, if not intentionally.

Example Theories: Rising Inflation is bad for the stock market. A booming housing
market is good for the S&P 500 stock index. A falling fed funds rate means that long
term interest rates will fall.

There are many such theories. In this site,  long term investment and economic data
is tested against decades to determine whether a relationship actually exists or not.
This historical correlation provides a vital aid in interpreting the often confusing
behavior of the financial markets. The perspective gained may be the difference
between staying the course or being blown and tossed by every investment theory
that is popular at the moment. What the majority assumes to be true, often is not. In
the final analysis, readers are admonished to follow the evidence, wherever it leads.

This page tests the relationship between the Corporate Cash Flow Growth Rate and
the Dow Jones Index Return Rate. Suppose you are making a business or investment
decision. Suppose again that the decision hinges on whether the Corporate Cash
Flow Growth Rate and the Dow Jones Index Return Rate tend to move in the same or
opposite directions. The data, graphs, and analysis above will enlighten you. You'll
discover whether they move with, inversely to, or independently of each other.

Suppose that the Corporate Cash Flow Growth Rate has risen sharply and that you
need to know what direction the Dow Jones Index Return Rate is headed in the near
future. Does the recent increase in the Corporate Cash Flow Growth Rate provide a
clue about the future direction of the Dow Jones Index Return Rate? The data history,
graph, and analysis above will show you how the Dow Jones Index Return Rate has
performed after increases in the Corporate Cash Flow Growth Rate. You'll see if one
indicator has been likely to signal a change in another. This is not intended as a
prediction, but merely as a clue to the future from the annals of history. No man
knows the future, unless he has the ability to control the future.

This site compares data series for interest rates, stock indexes, economic indicators,
currency exchange rates and real estate values. Suppose that you want to see how
stock indexes are influenced by interest rates or the value of the dollar. Click one of
the stock index links on the right side of any page. Links to our multi-series graphs
and correlation analysis may be found at the bottom-center of the stock index pages.


Formula for periods with a rising Corporate Cash Flow Growth Rate:
1) Change in the Dow Jones Index Return Rate DURING periods with a rising
Corporate Cash Flow Growth Rate:
The abbreviated formula is: (Dow Jones Index Return Rate Change / Corporate Cash
Flow Growth Rate Rise) x 1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones Index Return Rate over
all rolling 12 month periods with a rising Corporate Cash Flow Growth Rate) /
(Average Rise in the Corporate Cash Flow Growth Rate over the same 12 month
periods)] x 1% = Published Rate.

2) Change in the Dow Jones Index Return Rate AFTER a rising Corporate Cash Flow
Growth Rate:
The abbreviated formula is: (Subsequent Dow Jones Index Return Rate Change /
Corporate Cash Flow Growth Rate Rise) x 1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones Index Return Rate
during the 12 months following any rolling 12 month base period with a rising
Corporate Cash Flow Growth Rate) / (Average Rise in the Corporate Cash Flow
Growth Rate over the 12 month base periods)] x 1% = Published Rate.


Formula for periods with a declining Corporate Cash Flow Growth Rate:
1) Change in the Dow Jones Index Return Rate DURING periods with a declining
Corporate Cash Flow Growth Rate:
The abbreviated formula is: (Dow Jones Index Return Rate Change / Corporate Cash
Flow Growth Rate Decline) x -1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones Index Return Rate over
all rolling 12 month periods with a declining Corporate Cash Flow Growth Rate) /
(Average decline in the Corporate Cash Flow Growth Rate over the same 12 month
periods)] x -1% = Published Rate.

2) Change in the Dow Jones Index Return Rate AFTER a decreasing Corporate Cash
Flow Growth Rate:
The abbreviated formula is: (Subsequent Dow Jones Index Return Rate Change /
Corporate Cash Flow Growth Rate Decrease) x -1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones Index Return Rate
during the 12 months following any rolling 12 month base period with a declining
Corporate Cash Flow Growth Rate) / (Average decline in the Corporate Cash Flow
Growth Rate over the 12 month base periods)] x -1% = Published Rate.


Rolling 12 Month Periods Defined:
Overlapping 12 month periods in a monthly data base.

For example:
In the 24 month period included in 2000 - 2001, there are 13 complete rolling 12
month periods. The first is January, 2000 - December, 2000. The second is February,
2000 - January, 2001. The third is March, 2000 - February, 2001 and so on. The last
complete rolling 12 month period in the 2000 - 2001 period is January, 2001 -
December, 2001.
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
Corporate Cash Flow
The Dow Jones Industrial Average, is shown above in gray and is measured using the left axis.
US Corporate Cash Flow is shown in black and is measured in trillions of dollars (right axis).
Dow Jones Industrial Average
14000
10000
8000
6000
4000
2000
0
12000
2.8
2.0
1.6
1.2
0.8
0.4
0
2.4
1/2000        1/2002               1/2004              1/2006               1/2008               1/2010          1/2012
Multi-Index Chart
TwinCharts.com
More Multi-Index Charts
To see the Dow Jones Industrial Average on a chart with many other indexes like the
Gross National Product, Oil Prices or Unemployment Rates, click
Dow Jones Indicators.
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