The Dow, the American market barometer with the longest history, has recorded only four longer periods in which the market was unable to set a new high. It came nowhere near, of course, the quarter-century it took the market to recover all of the ground lost in the Great Depression, but in magnitude it was second only to that fall among long-lasting declines.

At the worst, almost exactly four years ago, the Dow was down 54 percent from its closing price on Oct. 9, 2007. While that was nowhere near the 89 percent disaster seen during the Depression, it exceeded the 47 percent fall after the 1919 peak and the 46 percent plunge after the 1973 high.

All of those figures are in nominal dollars, excluding the effect of inflation. As can be seen in the accompanying charts, the Dow remains nearly 10 percent below its 2007 level when adjusted for changes in consumer prices. That peak, too, was a little lower than the 2000 high when adjusted for prices. So on an inflation-adjusted basis, the market is still below where it was 13 years ago.

The Dow contains 30 stocks at any given time, but SP Dow Jones Indexes, which now manages the index, periodically removes companies and replaces them with others. The accompanying charts list the performance of the 36 stocks that were in the Dow over some part of the period since 2007.

The one that many readers will not recognize is Mondelez. It was known as Kraft Foods when it replaced the American International Group, the disgraced and bailed-out insurance company, in the index in 2008. But last year, Kraft split up and was taken out of the index. There is still a company called Kraft, which sells products in North American grocery stores, but Mondelez is the larger part, selling snack foods around the globe.

Mondelez, by whatever name, is one of seven Dow companies that outperformed the index both on the way down — from Oct. 9, 2007, through March 9, 2009 — and on the way back, through Tuesday, when the index first closed over its 2007 peak. The charts end on that day. The others are Altria, I.B.M., Home Depot, Travelers, Pfizer and United Technologies.

Altria, the tobacco company, was kicked out of the index in 2008. Had it stayed, it would have been the best-performing Dow company from peak to peak, gaining 117 percent. Among the companies now in the index, Home Depot was the best performer, with a 108 percent gain.

The charts show the large benefits, and large risks, available to those who speculate in stocks that have lost nearly all their value. Four of the companies — Bank of America, General Motors, Citigroup and A.I.G. — were off more than 90 percent when the market hit bottom. Three of them have since tripled or better. The fourth, General Motors, continued to fall, and the old shares became worthless after the company went through bankruptcy. The current G.M. shares went to creditors of the old company, not to shareholders.

Percentage gains from very low levels can be deceptive, however. A.I.G. is up more than 500 percent over the last four years, but it is still 97 percent lower than it was when the market peaked in 2007. Similarly, Citigroup is down 90 percent, and Bank of America is off 78 percent.

Four Dow stocks did worse than the index on the way down and also on the way up. Besides General Motors, they are Alcoa, Cisco and Merck.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://www.nytimes.com/2013/03/09/business/economy/dow-index-sets-new-high-but-not-with-inflation.html?partner=rss&emc=rss