S&P 500 Total Return Index

Please don’t show this to Robert Shiller, but here’s a graph we don’t see enough of. Over the last 10 years, the S&P 500 with dividends is up 135%, or 8.9% a year. That’s greater than the long-term average.

The reason the market didn’t rise in a perfectly straight line is because Alan Greenspan is mean.
Here’s another interesting graph. This is the Wilshire 5000 Total Return Index (^DWCT) since 1980. This the broadest index on Wall Street. Due to the strength of small-caps, this index has been outperforming the S&P 500. Note that this graph is different from the one above in that I used a logarithmic scale.
Looking at this, I don’t see how people can claim that the bear market is evidence against market timing. It looks like that the market started growing too quickly around 1997. If you had ignored the market from 1997 to 2004, you probably wouldn’t have been surprised to see where the market ended up. Today, we’re only about 3% from an all-time high.

Posted by Eddy Elfenbein on March 1st, 2006 at 10:49 pm

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