US Stock Surge 2019

US Stocks show average earning from 18% to 21% per year since 2017 for the Dow, S&P 500 and Nasdaq.

The Dow 30 Average closed at 28,538.44 on 12/31/19, up from 25046.86 on 12/31/18. The 3491.58 gain gives investors a 14% return for 2019. In 2016, the Dow closed at 17927. The Dow has increased by 10,311.33 or 54.5% from 2016 to 2019. The average return over the past 3 years is 19.17%.

Dow 30 Close       Gain    %Gain

2016   17927.11

2017   21750.20    3823.09   21.3%

2018   25046.86    3296.66   15.2%

2019   28,538.44   3191.58   12.7%

3 year Gain         10,311.33   57.5%

Average Gain        3437.11    19.17%

The S&P 500 Average closed at 3230.78 on 12/31/19, up from 2743.21 on 12/31/18. This 487.57 point gain gives investors a 17.8% return for 2019.  In 2016, the S&P 500 closed at 2094. The S&P 500 has increased by 1137 or 54.3% from 2016 to 2019. The average gain over the past 3 years is 18.1%.

S&P 500 Close   Gain    %Gain

2016   2094.65

2017   2429.08    334.43    16.0%

2018   2743.21    314.13    12.9%

2019   3230.78    487.57    17.8%

3 Year Gain       1136.13     54.3%

Average Gain       378.71     18.1%

The NASDAQ average closed at 8972.60 on 12/31/19, up from 6794.53 on 12/31/18. This 2178.09 gain gives investors a 32% return for 2019.  In 2016, the NASDAQ closed at 5521.23. The NASDAQ has increased by 3451.37 or 62.5% from 2016 to 2019. The average gain over the past 3 years is 21%.

NASDAQ Close   Gain   %Gain

2016  5521.23

2017  7200.24      1679.01   30.4%

2018  6794.53       -405.71   -5.63%

2019  8972.60      2178.07   32.06%

3 Year Gain          3451.37   62.5%

Average Gain       1150.46   20.83%

https://www.macrotrends.net/1320/nasdaq-historical-chart

US Stock History

Dow Jones Closing Average by Year

1915 74.45

1916 95.27

1917 87.87

1918 80.97

1919 99.79

1920 90.01

1921 73.39

1922 93.24

1923 94.87

1924 99.65

1925 134.40 Bubble

1926 153.00

1927 176.07

1928 226.17

1929 313.54 Correction

1930 236.04

1931 138.60

1932 64.53   Crash

1933 84.50

1934 98.16

1935 120.35 Roosevelt

1936 162.07

1937 166.45

1938 132.36

1939 142.57

1940 134.64

1941 121.93

1942 107.15

1943 134.92

1944 143.32

1945 169.66 Truman

1946 191.52

1947 177.48

1948 179.78

1949 179.67

1950 216.28

1951 257.41

1952 270.35 Eisenhower

1953 275.84

1954 334.34

1955 442.69

1956 493.21

1957 476.07

1958 491.26

1959 632.57

1960 618.02 Kennedy

1961 691.74

1962 639.14

1963 714.69

1964 834.09 Johnson

1965 910.70

1966 872.78

1967 879.48

1968 903.96 Nixon

1969 875.72

1970 753.12

1971 884.87

1972 950.08

1973 759.13

1974 759.13

1975 802.89 Ford

1976 975.20

1977 894.37 Carter

1978 821.13

1979 844.38

1980 891.14 Reagan

1981 932.95

1982 884.53

1983 1190.78 401K

1984 1178.59

1985 1327.99

1986 1793.10

1987 2277.53

1988 2061.48 Bush I

1989 2510.33

1990 2679.45

1991 2929.04

1992 3284.08

1993 3524.92 Clinton

1994 3794.22

1995 4494.28

1996 5739.63

1997 7447.01

1998 8630.76

1999 10481.66

2000 10729.38 Bush II

2001 10199.29

2002 9214.85

2003 9006.64

2004 10315.51

2005 10546.66

2006 11409.78

2007 13187.26

2008 11244.06 Obama

2009 8885.65 (Meltdown)

2010 10668.58 (QE)

2011 11957.57

2012 12966.44

2013 15009.52

2014 16777.69

2015 17587.03

2016 17927.11

2017 21750.20 Trump

2018 25046.86

2019 28,538.44

https://www.thebalance.com/u-s-inflation-rate-history-by-year-and-forecast-3306093

The S&P 500 Average Closing Price 1928 to 2018

1928 19.94

1929 26.19

1930 21.00

1931 13.66

1932 6.92

1933 9.04

1934 9.83

1935 10.58

1936 15.45

1937 15.41

1938 11.48

1939 12.05

1940 11.01

1941 9.83

1942 8.67

1943 11.52

1944 12.47

1945 15.14

1946 17.07

1947 15.15

1948 15.51

1949 15.24

1950 18.39

1951 22.32

1952 24.45

1953 24.72

1954 29.72

1955 40.50

1956 46.64

1957 44.42

1958 46.20

1959 57.42

1960 55.85

1961 66.27

1962 62.32

1963 69.86

1964 81.37

1965 88.16

1966 85.18

1967 97.96

1968 98.38

1969 97.77

1970 83.15

1971 98.32

1972 109.13

1973 107.44

1974 82.78

1975 86.18

1976 102.04

1977 98.18

1978 96.11

1979 103.00

1980 118.71

1981 128.04

1982 119.71

1983 160.47

1984 160.46

1985 186.83

1986 236.39

1987 287.00

1988 265.88

1989 323.05

1990 334.63

1991 376.19

1992 415.75

1993 451.61

1994 460.42

1995 541.72

1996 670.49

1997 873.43

1998 1085.50

1999 1327.33

2000 1427.22

2001 1192.57

2002 993.93

2003 965.23

2004 1130.65

2005 1207.23

2006 1310.46

2007 1477.18

2008 1220.04

2009 948.05

2010 1139.97

2011 1267.64

2012 1379.61

2013 1643.80

2014 1931.38

2015 2061.07

2016 2094.65

2017 2429.08

2018 2743.21

2019 3230.78

https://www.macrotrends.net/2324/sp-500-historical-chart-data

NASDAQ

December Close

2000  3651.43

2001  2839.78

2002  1899.10

2003  2796.70

2004  2941.19

2005  2882.35

2006  3079.49

2007  3249.09

2008  1977.71

2009  2702.56

2010  3114.47

2011  2969.87

2012  3391.85

2013  4610.96

2014  5185.97

2015  5443.05

2016  5521.23

2017  7200.24

2018  6794.53

2019  8972.60

https://www.macrotrends.net/1320/nasdaq-historical-chart

Norb Leahy, Dunwoody GA Tea Party Leader

Software Problems

Cyber Security and Software R&D are being pursued 20 years too late. We are learning about software problems as software fails and are stuck in the same “trial and error” trap we find in healthcare. The price for always putting the “horse before the cart” is high.

Boeing is suffering from preemptively deploying AI software in the 737 Max to by-pass the Pilot and Boeing will pay the price. They would do well by removing this software and allowing pilots to fly the airplanes. The Boeing problem will further dampen consumer acceptance of self-driving cars.

Engineering Managers in these companies need the technical expertise, good judgement, integrity, courage, leadership and policy backing to avoid serious errors. Product Test Data needs to be reviewed with CEOs.

In Matrix organizations, Functional Engineering Managers serve as “Coaches” and ensure that needed engineering skills are provided by serving as hiring and training managers.  Project Engineering Managers serve as “Leaders” and ensure that projects are planned and executed within budget and schedule and coordinated between Project Teams.

If it can to wrong, it will (go wrong). NASA Challenger O-Rings failed in 1986 killing 7 Astronauts, because they were not designed to withstand cold temperatures. The Design Engineer alerted NASA management to the problem, but the launch was ordered anyway. The launch should have been postponed.

New technology takes time to develop. The Japanese developed the hybrid engine over 20 years. It required stronger batteries and a custom on-board computer to work with a small, compatible, reliable internal combustion auto engine. It began with a joint venture funded by government and Toyota. Their timing to market in 2000 was perfect and their redesign in 2005 was amazing. 

Product Planning

The DEC Rainbow 100 PC was released in 1982, but failed.

The Rainbow was MS-DOS compatible, but not completely software- or hardware-compatible with the IBM PC.

https://en.wikipedia.org/wiki/Rainbow_100

Timing to market was too soon. DEC should have had better judgement about their architecture.

Dell Computer was founded in 1984 and released its first PC in 1985. It was IBM compatible, high quality and low cost. Dell went public in 1988 and became the favored corporate PC. Dell began on-line sales in 1996.

https://www.britannica.com/topic/Dell-Inc

Timing to market was perfect and judgement was flawless.

Norb Leahy, Dunwoody GA Tea Party Leader

US Housing Cost

Monthly rental costs are moving higher than home mortgage payments in most urban areas. The cost of living in the US is high. The US average home mortgage payment is $1,492 and the average monthly rent is $1,350. 34% of homeowners have paid off their mortgages and have no payments other than their annual property tax.

Apartment Rental Costs

The Average monthly apartment rent in the US in 2019 is $1,350 per month. The average apartment in the United States can run anywhere from $500 (one bed room apartments in more rural areas) to $1,500 (3 bedroom apartment in urban areas). This price could also vary depending on which utilities are included in your rent.

US Monthly Apartment Rental Cost History

1940 $284

1950 $257

1960 $350

1970 $415

1980 $481

1990 $571

2000 $602

2019 $1,350

https://www.census.gov/hhes/www/housing/census/historic/grossrents.html

The US average monthly home rental cost

1960 $568

1970 $670

1980 $698

1990 $810

2000 $828

2008 $1000

2010 $928

2016 $1,001

2017 $1,349

2018 $1,405

2019 $1,465

US average monthly mortgage payment

The median monthly mortgage payment for US homeowners was $1492, including costs from taxes and insurance.

https://www.apartmentlist.com/rentonomics/rent-growth-since-1960/

The average cost of a new home in the US has increased 1000% from 1930 to 2019.

US Average Home Cost History

1930 $3,845

1940 $2,920

1950 $8,450

1960 $12,700

1970 $23,450

1980 $68,700

1990 $123,000

2008 $238,880

2013 $289,500

2019 $379,600

US Big City Home Cost

San Francisco median home prices rose from $420,000 in 2000 to $1.3 million in 2019. The median home selling 

price was $589,770, a drop of 2.6 % from October yet it that is still up 6.4% from November 2018. Year to date sales are down 1.9% in November.

https://www.trulia.com/CA/San_Francisco/

Los Angeles median home prices rose by 11% to $998,000 In October 2019. The median listing price per square foot was $598. The median sale price was $840K.

Manhattan New York Apartment average rose to $1 million in November 2019. The average price of homes across New York State was $321,934 ranging from $82.300 in Syracuse to $672.400 on Long Island. 

https://www.zillow.com/ny/home-values/

Washington DC Home Price average hit $626,905 in November 2019.

https://www.zillow.com/washington-dc/home-values/

As prices rise, sales are reduced. Businesses and families continue to flee San Francisco, Los Angeles and New York City for lower taxes and lower housing costs.

The US Cost of Living Index for North America lists US cities ranked by cost of living.

https://www.expatistan.com/cost-of-living/index/north-america

Norb Leahy, Dunwoody GA Tea Party Leader

US Inflation Since 1913

How Much Inflation have we had since 1913? By Tim McMahon 6/18/15, inflationdata.com.

US Cumulative inflation increased by 92.86% from 1913 to 1919 and increased by 103.45 from 1970 to 1979.

Just like compound interest compound inflation grows faster and faster.  The average annual inflation since 1913 is "only" 3.24%.  See Average Annual Inflation Rates by Decade

But as you can see from the chart below compounding something for almost 100 years at 3.24% will result in over 2000% inflation. The Consumer Price index (CPI-U) for January 1913 was 9.8.  The CPI-U for September 2013 was 234.149.  This means that something that cost $9.80 in January of 1913 would cost $234.15 today!

If that isn't bad enough, actually the situation is even worse than that. If you look at the chart carefully you will see that inflation was fairly steep during the "teens" from 1913 - 1920 actually almost 100% (See: Total Inflation by Decade). Then during the 1920's and 1930's inflation actually declined.  The CPI-U index stood at 13.9 in January of 1940.

So actually most of the 2000% inflation occurred since 1940.  The average annual inflation rate in the 1940's was 4.86% in the 1970's it was 7.25% and the 1980's was 5.82%. Each of those decades were especially hard economically for people trying to make ends meet while prices increased and wages didn't keep up.

For more information and a chart see the average annual inflation rates for all decades since 1913.

https://inflationdata.com/Inflation/Inflation/Cumulative_Inflation_by_Decade.asp

US Inflation History - Average inflation rate by year from 1914 to 2018

In 1913, the US Congress passed the Federal Reserve Act. It imposed a “managed economy’ and gave the Federal Reserve Bank the authority to set the discount interest rate used to lend money to banks and print money, causing inflation. Congress also passed the Income Tax Act and Inheritance Tax Act in 1913. The first years were mild with a 1% income tax and 1% inflation in 1914 and 1915.

Inflation moved to 7.9% in 1916, 17.4% in 1917, 18% in 1918, 14.6% in 1919 and 15.6% in 1920.

https://www.usinflationcalculator.com/inflation/historical-inflation-rates/

1914 1.0

1915 1.0

1916 7.9

1917 17.4

1918 18.0

1919 14.6

1920 15.6

1921 -10.5

1922 -6.1

1923 1.8

1924 0.0

1925 2.3

1926 1.1

1927 -1.7

1928 -1.7

1929 0.0

1930 -2.3

1931 -9.0

1932 -9.9

1933 -5.1

1934 3.1

1935 2.2

1936 1.5

1937 3.6

1938 -2.1

1939 -1.4

1940 0.7

1941 5.0

1942 10.9

1943 6.1

1944 1.7

1945 2.3

1946 8.3

1947 14.4

1948 8.1

1949 -1.2

1950 7.9

1951 1.9

1952 1.9

1953 0.8

1954 0.7

1955 -0.4

1956 1.5

1957 3.3

1958 2.8

1959 0.7

1960 1.7

1961 1.0

1962 1.0

1963 1.3

1964 1.3

1965 1.6

1966 2.9

1967 3.1

1968 4.2

1969 5.5

1970 5.7

1971 4.4

1972 3.2

1973 6.2

1974 11.0

1975 9.1

1976 5.8

1977 6.5

1978 7.6

1979 11.3

1980 13.6

1981 10.3

1983 6.2

1984 3.2

1985 4.3

1986 3.6

1987 1.9

1988 3.6

1989 4.1

1990 4.8

1991 5.4

1992 4.2

1993 3.0

1994 2.6

1995 2.8

1996 3.0

1997 3.2

1998 1.6

1999 2.2

2000 3.4

2001 2.8

2002 1.6

2003 2.3

2004 2.7

2005 3.4

2006 3.2

2007 2.8

2008 3.8

2009 -0.4

2010 1.6

2011 3.2

2012 2.1

2013 1.5

2014 1.6

2015 0.1

2016 1.3

2017 2.1

2018 2.4

2019 1.9

https://www.usinflationcalculator.com/inflation/historical-inflation-rates/

Norb Leahy, Dunwoody GA Tea Party Leader