Milestones are always big events and often a good time for reflection. The Dow Jones hitting 20,000 is just such a milestone and certainly worthy of attention.
Considering it would take a portfolio growing at an annual rate of 8% about 9 years to double in size that’s not half bad. That is until you consider how long it took to double in the past. Indeed, as you can see from the chart below it took significantly longer to for the Dow to double to 10,000 than it has historically. More than 40% longer.
The chart below looks at the time it took for the index to double, but it excludes periods where the index may have slipped back below one of the milestone values like 2,500, 5,000 or 10,000. In some cases it could take years before the index permanently stays above a milestone figure.
That was certainly the case after the Dow soared above 10,000 in the late 1990s. After the tech crash the blue-chip index would make several runs at topping the 10,000 point mark before slipping again. The index only broke through that ceiling for good in July of 2009—a full decade after it first reached that plateau.
As long as it’s taken the Dow to double, it’s still far outperformed the S&P/TSX Composite. Over those same 2,751 days the S&P/TSX Composite is only up 60%, excluding dividends.
Still, reaching the 20,000 plateau has been a long time coming—perhaps too long considering how long its taken to double in the past.