The S&P 500 Made an All-Time Inflation-Adjusted High

On February 12, I said that the S&P 500 may have closed at an all-time inflation-adjusted high. The problem was that I couldn’t say for sure; I had to estimate. The reason was that the official inflation stats wouldn’t come out until a few weeks after the month had ended. In this case, the CPI report for February was released on March 24.

Well, we now have the numbers for February and it turns out, I was one day off. On February 13, the S&P 500 finally topped its inflation-adjusted high set nearly 15 years before. Of course, with dividends, the S&P 500 has had a real positive return.

The computation was further complicated by our recent bout of deflation. The unadjusted CPI fell six times in seven months. But in February, consumer prices rose.

The lesson is that stock prices can go a long time without any real gains. It also shows us the importance of dividends. The S&P 500 paid out $39.44 in dividends last year (that’s the index-adjusted figure). That’s up from $16.69 paid out in 1999.

Posted by on April 6th, 2015 at 9:54 am


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