This post graphs the Dow Index normalized price/earnings ratio since 1929, and compares the p/e ratio to overall stock market performance. It again touched 200 level in 1947 and regained 300 level in 1954 that means Dow Jones took 25 long years to regain to its previous 300 levels in 1929. It took mere two years to reach the level whereas Dow Jones took 17 long years to gain the same (from 1910 to 1927). Of course, Dow reached 300 points at a faster pace (in two years, 1929) where as Sensex reached the level in 4 years (1985-86). It took Dow Jones Industrial Average 46 years to reach 500 mark from 100 (1910 to 1956) but Sensex achieved it in only seven years. Sensex was at 1000 in the next four years (1990-91) where as Dow Jones took 16 years to be doubled from 500 to 1000 (1956-72).
What sensex achieved in eleven years Dow took sixty two years for the similar rise i.e. from 100 to 1000. The journey of Dow Jones Industrial Averagefrom 1000 to 2000 took sixteen long years (1956-72).Here Indian stock market had grown eight times faster than the stock market of US. This time Dow Jones was relatively faster in comparison to its own previous records but still took time double to its counterpart.
It could able to reach it in 1999-2000, in five long years where as Dow completed this journey faster than Sensex in only 3 years (1991-1994). Bombay Stock exchange is not even older that much so far and tasted a level of 21000 plus once in January, 2008. Dow Jones was at 8235 on the same day that was 3.2 times higher than that of Sensex. So whether it is a bull market or a bear, Sensex runs much faster than Dow Jones.
As of today, while writing this hub, Dow is trading near 8600 and sensex has closed at 9690 i.e. more than one thousand points above Dow Jones. Both the stock markets gained in bull markets and lost in bear markets but Sensex performed far better than Dow did over all. The Sensex has fallen freely from that time to taste below eight thousand marks in October, 2008 this year. BSE Sensex has performed far better in last twenty to twenty five years than Dow Jones.
Dow could not be able to double in fifteen years where as Sensex managed a steep rise of almost forty times in the same period (3975 in 1994-95 from hundred points in base year 1979-80) before tasting its first bear market. Dow Jones has gained only four hundred points or five percent so far in last seven years i.e. from 9/11 2001 but BSE Sensex has gained seven thousand three hundred points or two hundred seventy five percent. Moreover, whenever sensex fell, it managed to regain its previous status sooner than Dow Jones.