Notes from the Autonomous Region of Great Britain

Sunday, October 18, 2009

Comparing the Dow with CPI, and with debt


James Higham said...

And your conclusion and projection, Sackers?

Sackerson said...

Ine the Dow/CPI comparison, I think the Dow is still above where it "should" be.

As to Dow vs debt, I wonder myself. I think it suggests a long-term progress away from investment based on savings towards investment based on borrowing and speculation. The current buzzword is "financialisation", I believe. Maybe comparing the Dow/debt with the Dow/CPI would show points where the two were significantly out of step, and this could indicate increased danger of volatility and market collapse? But I just don't have the time and resources - maybe one of your full-time City contacts could think about it.

dearieme said...

At least in the early part of your period, the Dow would also have been paying useful dividends, which I suppose should be allowed for somehow.

Still, not only are equities probably overvalued, but so are bonds I dare say, and property too. So what to do? Fill your attic with "stuff"?

Sackerson said...

Spot-on question, DM. Currency speculation? Land? Oil?