However, when you take inflation into consideration, we can see from the red line (which is the "inflation adjusted NYSE Index stock price" in current dollars) that in inflation adjusted 2007 dollars the index began 1966 just above 3200 and fell to 1312 in July of 1982.
So rather than a 23% increase, if you had held stocks for the 16 years from 1966 to 1982, you would have actually lost 59% of your purchasing power due to inflation.
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btw - here is the spreadsheet that I used. Go the the "annual" tab and change the two years in yellow to generate the nominal and real returns from say 1926 - 2000 in row 2. The %'s in row 7 of the "annual" tab are the % in each asset [TSM, S&P 500, Tbill, 5 yr Treas, LT Treas].
[disclosure: I didn't create the spreadsheet. Some guy named Richard that used to post on the VD M* board did]
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