The following is a high level discussion of the recent history of the S&P 500 stock index.
Past performance is not indicative of the future. This discussion is not intended as specific
advice for any particular investor, but is intended for general education purposes only.
Investors should consult with a qualified financial professional. All other DRWFinancial.com disclaimers apply.
The last time the S&P 500 traded at the current levels (in the mid 1500 price range) was Fall of 2007. On October 5 of that year, for example, the index closed at 1558. Today, as of ~ 10am, the index is right at 1550. In many ways, this comparison can feel depressing: what do we have to show for the last 5.5 years!?
But the larger picture is a little more positive, and a little more interesting. This chart shows the percentage price change in the S&P 500 over the last 10 years (3/22/2003 - 3/22/2013):
As you can see, from that starting point in 2003 the market rose more 70%, then fell considerably, and has since risen again overall ~ 79.75%. Someone invested in a fund that tracks the index (like the SPY exchange traded S&P 500 fund) over those 10 years would have experienced similar growth.
Even a shorter holding period, say for the last 5 years, has shown considerable net growth for such investors. This chart shows the percentage change in the S&P 500 index from March 22, 2008 to the present:
That dip to the low point in 2009 was severe, but the resulting rise in prices was also substantial. One more important point before we move on from this discussion: all of the above charts describe only the price movement of the index, and do not include dividend data. To see the affect of dividends on these holding periods, the S&P Total Return index can be helpful. Here is the 10 year chart from above, but using the S&P Total Return data:
As it turns out, including dividends in the 10 year math makes a big difference. The total return vs just the return on price moves the number from 79.75% up to 120% - that seems to be a material difference!
A few potential takeaways from this look at the market:
David R Wattenbarger, president of DRW Financial
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