Here it is the ratio of the Dow to The Gold Price demonstrating the real return on stocks and it indicates another 80 percent drop lies ahead.
“The Most Important Chart in the World” is the ratio of the Dow Jones Industrial Average: The Gold Price. In a nutshell, charting this ratio demonstrates the “real” return on stocks adjusted for inflation or currency debasement.
Fill your bowl to the brim and it will spill. Keep sharpening your knife and it will blunt. Chase after money and security and your heart will never unclench. Care about people’s approval and you will be their prisoner. Do your work, then step back. The only path to serenity.
- Tao Te Ching
It is not the consciousness of men that determines their being, but, on the contrary, their social being that determines their consciousness.- Karl Marx
Keep away from people who try to belittle your ambitions. Small people always do that, the really great make you feel great too- Mark Twain
The Most Important Chart in the WorldBack in my Bernstein days, I never really took a large amount of presentation materials to most of my meetings. However, there was one chart that I always printed out and brought with me and I called it “The Most Important Chart in the World.” It still is. The chart I am referring to is the ratio of the Dow Jones Industrial Average: The Gold Price. In a nutshell, charting this ratio demonstrates the “real” return on stocks adjusted for inflation or currency debasement. As we all know, the Zimbabwe stock market essentially went up to infinity during their hyperinflation but did anyone get rich from that? Of course not, the shares were denominated in a currency that was on its way to worthlessness. At the moment, with many U.S. stock indices hitting new post-2008 highs there seems to be a general view that stocks as an asset class will do well in an inflationary environment. As a result, whenever there is actually QE or even the mention of the potential resumption of Fed balance sheet expansion there is a rally in equity prices. In fact, I think the entire investor class in the U.S. has been lulled into a sense of sleep and complacency at the moment. There are two things I want to point out to people when they are considering whether to increase exposure to equities broadly or not.