The Lost Decade for the S&P 500

October 8th, 2011

by Doug Short

Here is a new update of a chart that illustrates the total return performance of the S&P 500 since the Tech Bubble closing high on March 24, 2000. The chart shows the value of $1000 invested in the index, including dividends, but excluding any taxes or fees. I've also included the real value using the Consumer Price Index for the inflation adjustment.

I calculated on the returns based on the daily price and daily dividends interpolated from the quarterly dividends as reported by Standard & Poor's. Thus the $1335 nominal and $976 real values are the hypothetical returns excluding any taxes or fees.

We're now over twelve years beyond the S&P 500 2000 high. This little charting exercise gives credence to the frequent reference to a "lost decade" for investors. In nominal terms, the index is about 33.5 percent above where it was at the 2000 peak, but in real terms, it's a less impressive 2.4 percent off the original investment. The chart also offers support for the wisdom of diversification across asset classes … and perhaps the value of active management during secular bear markets.

For anyone interested in total returns on a lump sum with an additional fixed-sum monthly investment, check out the nifty calculator at Political Calculations.


Note: The dividends for the most recent months are from Standard & Poor's. For real returns I use a linear extrapolation for the most recent month(s).

The Political Calculations calculator does not use extrapolations. Thus the latest end date is a month or two behind the current date.

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