A history of the Dow

Dowchart

The Dow seems to rise at an unstoppable pace ...

Recent swings in the stock market have left some Americans wondering if they would be better off hiding their savings under a mattress. But the market is fickle and, it turns out, likes being up more than down. To help put the recent turmoil in context, here is an analysis of the Dow Jones industrial average since its inception in 1896:

Four bear markets

... but it is a race of Bulls vs. Bears

A comparison of bull and bear markets shows that gains outweigh losses, and bull markets last for longer periods than bears. This graphic defines a bull or bear market as a 20% drop or rise from the most recent peak or trough.

Early Dow

Early history

A period of relative prosperity was interrupted in 1907 with a series of bank and trust failures. The panic, which was quickly brought under control by financier J.P. Morgan Sr., was the most severe financial crisis to date and led to the creation of the Federal Reserve System.

Dow in the 1920s

Roaring 20s come to a screeching halt

The market rose steadily during the 1920s. Millions of Americans dabbled in trading on the New York Stock Exchange. But in 1928, a speculative fever swept through the market, pushing prices to dangerously high levels. The market crashed in October 1929. Much of the panic was a result of a communications breakdown, leaving investors in the dark about prices.

Dow in the 1920s

Post-war recovery

The scars of 1929 and the Great Depression took a long time to heal. Public participation in the stock market remained low until after World War II. In 1949, the first great postwar bull market got underway and Wall Street entered a new period of expansion.

Dow in the 1920s

The 1960s and 1970s

The market was relatively flat during the 1960s and '70s as it flirted with crossing the 1,000 mark.

Dow in the 1920s

End-of-century boom

The Dow climbed as investors poured money into Internet start-ups. Most of the companies failed to live up to investor speculation, and the bubble burst in early 2000.

Dow in the 1920s

2008 financial crisis

The housing bubble went bust, causing the worldwide financial crisis and historic Dow losses that bottomed out in March 2009. Since then, stock prices have moved on a generally upward path — until recently.

NOTE: Bull or bear markets could not be calculated between Sept. 30, 1912, and Nov. 21, 1916, because of a change in the number of components in the Dow. The technical definition of a bull or bear market is a 20 percent drop or rise from the most recent peak or trough. The Dow is charted on a logarithmic scale in order to compare its movements during its early history with today's figures. Each unit increase represents an exponential increase in the underlying quantity for the base of 10.

SOURCES: WSJ Market Data Group; ''The New York Stock Exchange: The First 200 Years,'' Greenwich Publishing Group; Doug Short, vice president of research, Advisor Perspectives

GRAPHIC: Laura Stanton and Karen Yourish - The Washington Post. Updated Aug. 30, 2011.