|
|
 |
|
|
| |
|
|
Tip Sheet
Tip Sheet Archive
Overview
High Dividend Yield
High Yield DJIA30
High Yield TSX60
Dividends at Risk
Dividend Risk DJIA30
Dividend Risk TSX60
Value Ratio Approach
Value Ratio DJIA30
Value Ratio TSX60
Graham's Approach
Graham DJIA30
Graham TSX60
Other Screens
Low P/E DJIA
Low P/E TSX60
Low P/B DJIA
Low P/B TSX60
Low P/S DJIA
|
Stingy Investor Tip Sheet
|
|
| Get A Grip |
The markets hit new lows on Monday and there was a great deal of talk
about a decade of lost returns. That got me thinking. How did returns
adjusted for the impact of inflation fare?
I picked up Robert Shiller's monthly S&P500 real price data and
updated it to the close of February 23, 2009. You can see a graph of
the data below where I set the 0% gain line at the February 23 price.
Based on monthly real price data for the S&P500, we were last at
similar levels in the summer of 1995 not including reinvested
dividends. Dividend reinvestment would present a cheerier picture.
But what would happen if we're in the middle of a repeat of the
1929-to-1932 crash where stocks lost 80.6% in real terms from peak to
trough?
Well, just take a look at the red line on the graph which shows the
80.6% price decline level from the peak in the fall of 2000.
Should such an event occur, we'd hit very similar price levels on the
S&P500 as we did near the lows in 1982 and near the peaks in 1929.
That'd make it almost a lost century for the S&P500.
Sure we had a big bubble in 2000, but does a repeat of the
1929-to-1932 crash appear to be a likely scenario? Not really.
(click for larger version)
Correction:
The 1929-32 loss was corrected from 86.1% to 80.61%. The extra 0 was
lost in transcription. The text and graph were modified slightly to
reflect the change.
|
| | 02/25/2009 5:30 PM EST Permlink save & share | Markets |
|
|
| | |
|
| |
|
|
|
| Disclaimers: Consult with a
qualified investment adviser before trading. Past performance is a
poor indicator of future performance. The information on this site,
and in its related newsletters, is not intended to be, nor does it
constitute, financial advice or recommendations. The information on
this site is in no way guaranteed for completeness, accuracy or in any
other way. More...
|
