S&P 500: The lost decade

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The comments and chart below come courtesy of Doug Short, author of the dshort.com blog.

Here is a new update of a chart that illustrates the total return performance of the S&P 500 since the Tech Bubble closing high on March 24, 2000. The chart shows the value of $1,000 invested in the index, including dividends, but excluding any taxes or fees, as of May 20. I’ve also included the real value using the Consumer Price Index for the inflation adjustment.

I calculated on the returns based on the daily price and daily dividends interpolated from the quarterly dividends as reported by Standard & Poor’s. Thus the $1,070 nominal and $809 real values are the hypothetical returns excluding any taxes or fees.
For the sake of comparison and to validate the calculation method, we can compare the nominal return in the chart above to Vanguard’s 500 Index Investor Fund (VFINX), which has had a return of $1,057. Over the same timeframe the SPY ETF has returned $1,044.

We’re now over 11 years beyond the S&P 500 2000 high. This little charting exercise gives credence to the frequent reference to a “lost decade” for investors. It also offers support for the wisdom of diversification across asset classes.

Source: dshort, May 22, 2011.

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1 comment to S&P 500: The lost decade

  • Mal Williams

    Nice chart and good insite, however, the conclusion “It also offers support for the wisdom of diversification across asset classes” is far from evident since many/most asset classes have followed the S&P and/or did worse. My view is that it offers support for that fact that “full-dynamic asset class selection” is the killer ap if you have a good one. Your basic Merrill Lynch customer who got plugged into a standard asset class diversity portfolio with periodic micro adjustments died an 11-year death. Mal

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