May 23, 2024

All About the Dollar

By Peter Bower

The dollar isn’t what it used to be! Remember the 29-cent McDonalds hamburger? It is now $2.19. I remember many stock prices for well-known companies in the $30 to $50 range. They are now in the $200 to $500 range. The Bull is not referring to ancient history when citing some of these prices but citing examples well within our collective experience. You probably have many of your own examples.

When the Bull started in this business in the late 1970’s, the Dow Industrial Average Index was trading between 800 and 1,000 for almost a decade. It is now at approximately 40,000! Surely, some of this reflects the increased value many companies have created over this period. They have grown and produce much more profit, but inflation has also played a big part.

Back to the simple McDonald’s hamburger, it really has not changed since it was 29 cents. The difference in cost is all inflation. So how do you protect against this insidious erosion? Go back to the explosion in the value of the Dow Industrial Index, this points to one of the best ways. Owning good stocks has meant not only keeping pace with inflation, but also building real wealth on top of that. In the near-term, stocks go up and down and react to many different impulses, but look what has happened over time! It is astounding; over 40 times increase since the beginning of the Bull’s career. Stay steady my friends.

The Lonely Bull