Financial advisors and market analysts consistently warn investors that past performance is no guarantee of future performance. Whatever price increases a stock has posted throughout its market history, there is no assurance that the increase will be sustained over time, or that the stock can move even higher. Nevertheless, when discussing stock market performance over the decades, and back to the beginning of the 20th Century, experts also cite the fact that despite numerous sharp declines, generally the market has moved steadily upward through the last century and into the 21st Century, although there was a long period of little upward movement between 1929 and 1954.

Will that profitability continue in the face of the many domestic and global financial crises now facing the United States and the international community? For a reasonably reliable answer, although there’s no guarantee, let’s look at U.S. stock market history and the performance of the Dow Jones Industrial Averages (DJIA) through the decades.

Measuring the Stock Market

The Dow Jones Industrial Average was created in 1896 by Charles Dow, the founder of Dow Jones & Company and editor of the Wall Street Journal. and statistician Edward Jones. It is a means of measuring the trading range and market close of 30 major publicly held companies on a given day. The 30 stocks currently in the DJIA are not all industrial issues, but instead range across a variety of business sectors and industries, reflecting a general picture of stock market value and economic health. Over the previous century, the 30 stocks that have made up the DJIA have changed several times.

The DJIA number calculated at the end of a trading day is the sum of all stocks in the index divided by the number of stocks in the index, with revisions in the divisor made for dividends and stock splits. (For more on the DJ, read An Introduction To The Dow Jones Industrial Average .)

Big Wins, Big Losses, but the Trend is Up

A look at some of the highs and lows of the stock market over the past 105 years reveals a predictable pattern, and an inevitable and relentless upward climb in the value of equities, despite recessions. depressions and long periods of stagnation. (For more on analyzing market movements, read Profit By Understanding Fundamental Trends .)

We can begin our examination with the close of trading on Jan. 12, 1906, when the Dow Jones Index stood at 100.25; the first close above 100 points.

Continuing to move forward, the DJIA hit a high of 381.7 on Sept. 3, 1929. About eight weeks later the DJIA lost more than 70 points, between Oct. 28 and 29, 1929, declining to 230, a 23.6% loss. The so-called market crash set in motion the financial elements that led to the Great Depression. which hit bottom in 1932 and ended with the start of World War II.

A variety of economic factors caused the 1929 losses, including wild stock speculation and easy margin requirements that drove up stock prices well beyond their actual financial value. Falling prices for agricultural products, because of surpluses, also added to the decline. Most importantly, perhaps, were the meager earnings of some 60% of the American population, which was less than $2,000 annually. Economists estimated than basic living costs were $2,000 at minimum.

On July 8, 1932, the DJIA hit bottom at 41.22, a loss of 89.2% of its value two-and-a-half years earlier. This was the low point of the Great Depression in which some 12 million people were unemployed, some 20,000 companies went bankrupt, 1616 banks had gone bankrupt, and one in 20 farmers were evicted from their land.

After the War

It took almost 15 years for the DJIA to double its previous high of 1,003.16 on Nov. 14, 1972. On Jan. 8, 1987, the DJIA hit a record high of 2,002.25. Driving stocks upward were a record previous year for automobile sales, a strong U.S. dollar and a string of record DJIA highs that inspired investor optimism and were expected to bring new, profit-seeking investors into the market, which was expected to elevate even further.

On Oct. 19, 1987, the DJIA took another historic hit, falling 508 points, marking it as the biggest single one-day decline since the index was created. Some 22.6% of market value, about $500 billion, was lost in the day’s trading. A combination of investor fear, panic and a perception that the price-to-earnings ratios (P/E) of many stocks were too high, began a selling trend. As the market declined, a large number of automated sell programs kicked in as stop order levels were hit by falling stocks, triggering even more sales. The program trading sales were typically comprised of large blocks of shares and were sold by major brokerage and financial firms. Not long after the market hit that low, however, it began a quick recovery and resumed a bullish climb.

Breaking through the 10,000 barrier, the Dow closed at 10,006.78 on March 29, 1999. Leading the market were tech stocks, including microchip maker Intel, and financials such as J.P. Morgan Chase.

On March 16, 2000, the DJIA ran up its biggest gain in history, with a 499.19 point increase, an almost 5% spike. A number of high-tech and Internet-based start-ups issued IPO s during this period and their share prices rose far in excess of their net profits, which in many cases did not exist. The phenomenon of soaring market prices for these often financially shaky companies was called the Dotcom Bubble .

That trading day of a historic high was followed shortly afterward by the April 14, 2000 sell-off, which produced the largest point loss in DJIA history, a decline of 617.78 points, about 5.66% of value. In Oct. 2006, the DJIA surpassed the 11,000 mark.

In the last week of 2011, despite several previous trading sessions of steep declines followed by price recoveries, the Dow was trading above 12,000. Analysts attributed the apparent economic recovery to a slight decline in jobless claims, the bi-partisan congressional resolution of the payroll tax cut stalemate, and slightly higher than expected holiday consumer spending. (For more readings on the DJ, check out Why The Dow Matters . )

What Do the Experts Predict?

Optimistic analysts look at the steady increase in stock market value over more than a century of trading and see a relentless pattern of increases, despite the sell-offs and years of poor performance. For them, the outlook is bullish; Wall Street can be profitable and in fact was profitable, depending on where an investor bought in, at the end of 2011. The X-factor here is time. When the DJIA posts a major loss it may be time to buy, say some experts. A market recovery to previous highs and beyond seems inevitable, if past history is any guide. However, a prudent analyst may ask, how much time will elapse before the recovery begins?

Pessimistic analysts have said that the economy will move slowly for the foreseeable future, but even the most bearish concede that the economy will eventually return to a robust gross domestic product and a corresponding profitability in stock market investments.

The Bottom Line

The vigorous U.S. economy has always bounced back from numerous recessions and a major depression, eventually becoming more prosperous than previously. Odds are that an economic recovery is inevitable and there’s the potential for even better stock market profitability. How soon will the economy fully recover and how long will the boom be sustained, is another question. Business cycles are inevitable, but the long-term trend has always been up.

Among the reasons for the inevitable economic bounce-back is the propensity of the American consumer to spend. The U.S. savings rate is among the lowest among industrialized nations, meaning there’s more money being spent to stimulate the economy. America also has one of the world’s most productive workers, their productivity adding to the national wealth and to corporate profits. Finally, American innovation, including its technological advances, is a major factor in driving the economy, domestically and worldwide.

There are several additional factors which complicate market forecasting. Emerging markets and their need for financing, commodities and market exports, will strongly impact the U.S. economy, as will the developing European sovereign debt crisis. The U.S. debt crisis will likewise influence Wall Street performance. Add to the equation the potential for higher taxes, inflation or deflation. recession and depression, any of which can influence stock prices. Finally, there’s the unforeseeable, always an influence on stock prices for the short or long term: war, famine and natural disasters. So while in the long run it seems Wall Street may again be profitable, investors may need to weather more hits to their portfolios.