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What Dow 20,000 Means for Nasdaq Investors

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Investors pay a lot of money to sound good at cocktail parties. Owning growth companies, often found in the NASDAQ Index, sounds exciting, cutting edge, and like a can’t miss investment. But good ideas often make for terrible investments, whereas good “values” make for great ones. That’s why you should always consider the value you’re getting for any stock you purchase.

An easy way to do that is to evaluate a stock’s dividend and dividend increases over an extended amount of time. A simple comparison of how this dividend-centric approach has worked over the last 17 1/2 years is to compare the boring Dow to the high-flying NASDAQ.

In the first chart below, you can see that without dividends included, from the time the Dow hit 10,000 in 1999, to today, the NASDAQ has beaten the Blue Chips index by about 26%.

But in the second chart, you see the total returns of each index from March 1999, and they paint a different picture. When dividends are included, the Dow beat the NASDAQ by 48%. (both charts are rebased to 100 at 3/29/1999).

As you can see it’s usually the slow and steady investments that win the race.

dow vs nasdaq price return

dow jones vs nasdaq total return from march 1999

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.

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