S&P 500 Real Total Return Index

Here’s a look at the S&P 500 Total Return Index that’s adjusted for inflation. In other words, this is the S&P 500 with dividends included and adjusted for inflation. I calibrated the index to read 100 in January 1970.

The real return of the S&P 500 reached its month-end peak exactly 12 years ago. Over that time, the real return of the S&P 500 has been -12.2%. Think about that: Twelve years to lose one-eighth of your money.

Interestingly, inflation and dividends tend to track each other surprisingly closely (though not always), and therefore they cancel each other out.

(One small note: The CPI figure for August isn’t out yet, so the chart assumes zero inflation last month. That probably isn’t correct but the difference is minimal in a 16-year chart.)

Posted by on September 3rd, 2012 at 9:42 pm


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