Telly
Thinks s/he gets paid by the post
- Joined
- Feb 22, 2003
- Messages
- 2,395
I tuned in to Kudlow & Co. earlier this week, and caught a guy with a British accent who was very interesting. Didn't get his name, as I missed the beginning of that segment.
He was not impressed with the recent runup numbers, said that the previous high for the S&P 500 of 1527 in March 2000 (1527.46 on 3/24/00 I read in a newspaper) needs to be adjusted upwards for inflation to be applicable for today. He was going to say more, when Larry talked over him, and then they went on to something else.
I guess I never really thought about inflation's effect on indexes. If the index represents the stock prices of the constituent equities, then it would seem that the number of dollars needed to buy the stock today are inflated dollars versus the dollars of the past.
So to make an index relevant over time, we really need to adjust it for inflation, right? This could be done using CPI-U for the S&P 500, but for an international index, what a mess!
He was not impressed with the recent runup numbers, said that the previous high for the S&P 500 of 1527 in March 2000 (1527.46 on 3/24/00 I read in a newspaper) needs to be adjusted upwards for inflation to be applicable for today. He was going to say more, when Larry talked over him, and then they went on to something else.
I guess I never really thought about inflation's effect on indexes. If the index represents the stock prices of the constituent equities, then it would seem that the number of dollars needed to buy the stock today are inflated dollars versus the dollars of the past.
So to make an index relevant over time, we really need to adjust it for inflation, right? This could be done using CPI-U for the S&P 500, but for an international index, what a mess!