Analyst Jill Mislinski examines inflation-adjusted returns of the three major U.S. indexes since their 2000 peaks, and finds that real returns for investors haven’t been good.
This update is a response to a standing request from a couple of sources that we also share with regular visitors to our Advisor Perspectives pages. It includes the latest monthly close data.
The request is for real (inflation-adjusted) charts of the S&P 500, Dow 30, and Nasdaq Composite. Here two overlays — one with the nominal price, excluding dividends, and the other with the price adjusted for inflation based on the Consumer Price Index for Urban Consumers (which is usually just refer to as the CPI).
The charts require little explanation. So far the 21st Century has not been especially kind to equity investors. Yes, markets do bounce back, but often in time frames that defy optimistic expectations.
Performance of the SPY ETF
The charts above are based on price only. But what about dividends? Would the inclusion of dividends make a significant difference? Let’s take a look at the return on $1,000 invested in the SPY ETF at its March 2000 peak.
The total return certainly looks better, but the real (inflation-adjusted) purchasing power of that $1,000 is currently only 366 dollars above break-even, a real compounded annual return of 1.91%.
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