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Dow Jones 30
Dow Jones 30 Return Rate & GNP Growth Rate
Dow Jones 30 Return Rate vs. GNP Growth Rate: Analysis
 
DJIA Return Rate
Simultaneous Change
DJIA Return Rate
Subsequent Change
1% Rise in GNP Growth Rate over 1 Year
+1.11%
-1.72%
1% Decline in GNP Growth Rate over 1 Year
-0.98%
+1.80%
What does the table mean?
It indicates that a 1% GNP Growth Rate increase over a 12 month period, (from 5% to
6% for example) has typically been accompanied by a 1.11% Dow Jones 30 Return
Rate increase during that year and a 1.72% Dow Jones 30 Return Rate decline the
following year.

It also indicates that a 1% GNP Growth Rate decline over a 12 month period, (from
5% to 4% for example) has typically been accompanied by a 0.98% Dow Jones 30
Return Rate decline during that year and a 1.80% Dow Jones 30 Return Rate
increase the following year.

The center column shows the change in the Dow Jones 30 Return Rate over 12
months, depending on whether the period experienced a rising or falling GNP Growth
Rate. The right column shows the change in the Dow Jones 30 Return Rate during
the year following an increase or decrease in the GNP Growth Rate.

The data history in the middle column shows a strong 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 GNP Growth
Rate to predict the future direction of the Dow Jones 30 Return Rate is
strong (right column). However, the direction of the rates are inversely
related to each other. A change in the GNP Growth Rate suggests that the
Dow Jones 30 Return Rate will move in the opposite direction of the GNP
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 GNP Growth Rate and the Dow Jones 30
Return Rate. Suppose you are making a business or investment decision. Suppose
again that the decision hinges on whether the GNP Growth Rate and the Dow Jones
30 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 GNP Growth Rate has risen sharply and that you need to know what
direction the Dow Jones 30 Return Rate is headed in the near future. Does the recent
increase in the GNP Growth Rate provide a clue about the future direction of the Dow
Jones 30 Return Rate? The data history, graph, and analysis above will show you
how the Dow Jones 30 Return Rate has performed after increases in the GNP 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 GNP Growth Rate:
1) Change in the Dow Jones 30 Return Rate DURING periods with a rising GNP
Growth Rate:
The abbreviated formula is: (Dow Jones 30 Return Rate Change / GNP Growth Rate
Rise) x 1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones 30 Return Rate over all
rolling 12 month periods with a rising GNP Growth Rate) / (Average Rise in the GNP
Growth Rate over the same 12 month periods)] x 1% = Published Rate.

2) Change in the Dow Jones 30 Return Rate AFTER a rising GNP Growth Rate:
The abbreviated formula is: (Subsequent Dow Jones 30 Return Rate Change / GNP
Growth Rate Rise) x 1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones 30 Return Rate during
the 12 months following any rolling 12 month base period with a rising GNP Growth
Rate) / (Average Rise in the GNP Growth Rate over the 12 month base periods)] x 1%
= Published Rate.


Formula for periods with a declining GNP Growth Rate:
1) Change in the Dow Jones 30 Return Rate DURING periods with a declining GNP
Growth Rate:
The abbreviated formula is: (Dow Jones 30 Return Rate Change / GNP Growth Rate
Decline) x -1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones 30 Return Rate over all
rolling 12 month periods with a declining GNP Growth Rate) / (Average decline in the
GNP Growth Rate over the same 12 month periods)] x -1% = Published Rate.

2) Change in the Dow Jones 30 Return Rate AFTER a decreasing GNP Growth Rate:
The abbreviated formula is: (Subsequent Dow Jones 30 Return Rate Change / GNP
Growth Rate Decrease) x -1% = Published Rate.

The complete formula is: [(Average change in the Dow Jones 30 Return Rate during
the 12 months following any rolling 12 month base period with a declining GNP
Growth Rate) / (Average decline in the GNP 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.
1/50          1/1960            1/1970            1/1980           1/1990             1/2000            1/2010            1/20
The 12 month Dow Jones 30 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 GNP
Growth Rate is plotted quarterly in green (Gross National Product). Other two-data-series graphs are
available. See links at the bottom of each page.
-40%
40%
30%
20%
10%
0%
-10%
-20%
-30%
14000
10000
8000
6000
4000
2000
0
12000
The Dow Jones Industrial Average, is shown above in gray and is measured using the left axis.
US GNP is shown in black and is measured in trillions of dollars (right axis).
Dow Jones Industrial Average
Gross National Product (GNP)
14
10
8
6
4
2
0
12
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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