A brief history of s&p500

[mickeyd]

S&p 500 closing


12/31/2008 903.25
12/31/2009 1115.1
12/31/2010 1257.64
12/31/2011 1257.6
12/31/2012 1426.19
12/31/2013 1848.36
12/31/2014 2058.9
12/31/2015 2043.94
12/31/2016 2238.83
12/29/2017 2673.61
12/31/2018 2506.85
12/31/2019 3230.78
12/31/2020 3756.07
12/31/2021 4766.18
12/31/2022 3839.5
12/31/2023 4769.83

 

[kgtest]

S&p 500 closing


12/31/2008 903.25
12/31/2009 1115.1
12/31/2010 1257.64
12/31/2011 1257.6
12/31/2012 1426.19
12/31/2013 1848.36
12/31/2014 2058.9
12/31/2015 2043.94
12/31/2016 2238.83
12/29/2017 2673.61
12/31/2018 2506.85
12/31/2019 3230.78
12/31/2020 3756.07
12/31/2021 4766.18
12/31/2022 3839.5
12/31/2023 4769.83

Not bad, up 428% over 16yrs. Ended negative 3 of those yrs. One step backwards, two steps forward. Time is our frienemy.

 

[Closet_Gamer]

Not bad, up 428% over 16yrs. Ended negative 3 of those yrs. One step backwards, two steps forward. Time is our frienemy.

I bet in every single one of those years you could find loads of "sell it all now, the end in near!" news stories and articles.

 

[FREE866]

S&p 500 closing


12/31/2008 903.25
12/31/2009 1115.1
12/31/2010 1257.64
12/31/2011 1257.6
12/31/2012 1426.19
12/31/2013 1848.36
12/31/2014 2058.9
12/31/2015 2043.94
12/31/2016 2238.83
12/29/2017 2673.61
12/31/2018 2506.85
12/31/2019 3230.78
12/31/2020 3756.07
12/31/2021 4766.18
12/31/2022 3839.5
12/31/2023 4769.83

Amazing. Also, just think of all the "noise" headlines that came and went during that time that distracted people from staying invested

 

[Koolau]

Oh, for 20:20 hindsight. What would we all pay for that?

I've been way too conservative. I do have a fair chunk in the s&p500, but more would have been better. But, I could say that about a lot of things. I also have a few gold pieces in the lock box that have gone up almost 8X since 2001. Heh, heh, probably my best score was buying a dos Pesos gold piece around 1973(?) I paid $2 for it. I see them on ebay for $120 now. I don't know how to figure the yearly gain on that, I'm sure there were better investments at the time - had I known the future.

I got rid of tons of Megacorp stock over the years. Had I held onto all of it, I'd be a 1-per-center now. I did keep enough to increase my stash over the past 3 years even though I've spent like a (fill in your favorite phrase suggesting profligate spending - they're probably all un-woke.)

Probably the thing I did mostly "right" in my investing career is to diversify. Having said that, the "insurance" value of diversification can be relatively costly. YMMV

 

[mrfeh]

CAGR over the last 15 years: 11.7%

Of course, that's starting from near the low of the worst recession in 80 years. Start a year earlier (1/1/2008), and the CAGR is 8.1%, which is probably close to the long term average.

 

[Aerides]

Well the starting point could tell a different story if you moved it back to say...2000?

 

[SecondCor521]

Well the starting point could tell a different story if you moved it back to say...2000?

Yahoo Finance has the adjusted close on 12/31/1999 at 1469.25, not quite 4x in 24 years. Doubling every 12 years works out to about 6% compounded.

The standard reply, of course, is that pretty much nobody bought into the S&P500 with their entire asset base on 12/31/1999 and held it until today. Most people buy different things and buy over a 20- or 30-year period of time.

For example, I've been invested at least 90% in the S&P500 since at least 1987. The S&P500 closed 1987 out at 247.08. That's about 19x. Of course, I added to it from 1987 to 2016 (when I FIREd).

 

[OldShooter]

If you want to play with numbers like CAGR, the closing prices are the wrong thing to start with. You have to use total return, which includes the dividends received in each year. Google can take you to total return information and calculators for the S&P.

To @Koolau's point, though, this stuff is always crystal clear in the rear view mirror, but not so much when looking through the windshield.

Will Rogers: "Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it."

 

[jm67]

The problem I have with stock prognosticators is that tribal politics exerts a huge influence on people’s opinions. Those that support the current administration will bend over backwards to project strong market growth. Those opposed will claim the sky is about to fall. Best option of course is to ignore all the noise on both sides and keep invested.

 

[FREE866]

Yahoo Finance has the adjusted close on 12/31/1999 at 1469.25, not quite 4x in 24 years. Doubling every 12 years works out to about 6% compounded.

Its actually closer to 7% using this calculator which basically is a doubling every 10 years.



https://www.officialdata.org/us/stocks/s-p-500/2000?amount=1000000&endYear=2023



Couple different ways to analyze that:


1-Even though that 7% is below historical norms ( if you go back to 1926 its ~10%), that doubling still adds up after a couple decades


2-If we do have a "reversion to the mean" then the next 10-20 years returns should be greater.


In either case, my approach is to just stay invested as stocks are an outstanding long term investment

 

[mickj]

Oh, for 20:20 hindsight. What would we all pay for that?

I've been way too conservative. I do have a fair chunk in the s&p500, but more would have been better. But, I could say that about a lot of things. I also have a few gold pieces in the lock box that have gone up almost 8X since 2001. Heh, heh, probably my best score was buying a dos Pesos gold piece around 1973(?) I paid $2 for it. I see them on ebay for $120 now. I don't know how to figure the yearly gain on that, I'm sure there were better investments at the time - had I known the future.

I got rid of tons of Megacorp stock over the years. Had I held onto all of it, I'd be a 1-per-center now. I did keep enough to increase my stash over the past 3 years even though I've spent like a (fill in your favorite phrase suggesting profligate spending - they're probably all un-woke.)

Probably the thing I did mostly "right" in my investing career is to diversify. Having said that, the "insurance" value of diversification can be relatively costly. YMMV

According to ChatGPT, just a little better than 8.3% annual return


# Initial investment details
purchase_price = 2 # in dollars
current_value = 120 # in dollars
purchase_year = 1973
current_year = 2024

# Number of years
years = current_year - purchase_year

# Calculating the annual growth rate
# Formula: [(Final Value / Initial Value) ** (1 / Number of Years)] - 1
annual_growth_rate = ((current_value / purchase_price) ** (1 / years)) - 1

annual_growth_rate_percentage = annual_growth_rate * 100 # Converting to percentage
annual_growth_rate_percentage

 

[SecondCor521]

If you want to play with numbers like CAGR, the closing prices are the wrong thing to start with. You have to use total return, which includes the dividends received in each year. Google can take you to total return information and calculators for the S&P.

My understanding is the adjusted close numbers from Yahoo Finance incorporate dividends received, which is why I quoted them.

 

[skipro33]

In 2012 I realized I didn't need my IRA, having a COLA'd pension and later, social security, so I put 80% into an S&P500 fund and there it sits today. In 5 more years, I'll have to start RMD's and wonder what I'll do with another $80,000 year...

 

[TheWizard]

In 2012 I realized I didn't need my IRA, having a COLA'd pension and later, social security, so I put 80% into an S&P500 fund and there it sits today. In 5 more years, I'll have to start RMD's and wonder what I'll do with another $80,000 year...

Hopefully you've been Roth converting a decent amount of the $2M stash each year until you get to RMD age...

 

[OldShooter]

My understanding is the adjusted close numbers from Yahoo Finance incorporate dividends received, which is why I quoted them.

I wasn't familiar with the Yahoo stuff so I looked into it a little bit. I'm pretty sure they are not total return numbers, since the "adjusted" number ought to be climbing far away from the price number as dividends accumulate towards the end of any series. So I asked chatGPT:

"Is yahoo adjusted close the same as total return"

ChatGPT:

No, Yahoo Finance's adjusted close price is not the same as total return. The adjusted close price is a commonly used metric to reflect the stock's price on a given day after accounting for various corporate actions such as dividends, stock splits, and other adjustments. It provides a more accurate representation of the stock's true value over time.

Total return, on the other hand, takes into account not only the changes in stock price but also includes the impact of dividends or interest payments received by the investor. Total return is a more comprehensive measure of the investment's performance, as it considers both capital appreciation and income generated by the investment.

In summary, adjusted close price focuses solely on the stock price adjustments, while total return considers both stock price changes and income from dividends or interest. If you are interested in evaluating the overall performance of an investment, total return is a more inclusive measure to consider.

​

 

[SecondCor521]

I wasn't familiar with the Yahoo stuff so I looked into it a little bit. I'm pretty sure they are not total return numbers, since the "adjusted" number ought to be climbing far away from the price number as dividends accumulate towards the end of any series. So I asked chatGPT:

"Is yahoo adjusted close the same as total return"

ChatGPT:

No, Yahoo Finance's adjusted close price is not the same as total return. The adjusted close price is a commonly used metric to reflect the stock's price on a given day after accounting for various corporate actions such as dividends, stock splits, and other adjustments. It provides a more accurate representation of the stock's true value over time.

Total return, on the other hand, takes into account not only the changes in stock price but also includes the impact of dividends or interest payments received by the investor. Total return is a more comprehensive measure of the investment's performance, as it considers both capital appreciation and income generated by the investment.

In summary, adjusted close price focuses solely on the stock price adjustments, while total return considers both stock price changes and income from dividends or interest. If you are interested in evaluating the overall performance of an investment, total return is a more inclusive measure to consider.

​

I don't put any faith in ChatGPT's answers on financial stuff. It has definitely been wrong in its answers on taxes, for example.

That certainly doesn't mean I can't also be wrong!

The S&P500 is only stocks. AFAIK, stocks only pay dividends, not interest, so that part of ChatGPT's answer doesn't apply.

However, I did go back and look more closely, and Yahoo's S&P500 historical prices are not adjusted for dividends either. Presumably this is because the S&P index is just an index, so it arguably doesn't include dividends. Indexes don't pay dividends; stocks do.

It does look like one could substitute VOO instead; you can see the effect on the adjusted close if you look at the period around 12/20/2023. It seems to me that the adjustment in the close (of about $1.80) prior to that date is equivalent to reinvesting the dividend, and would therefore work for total return purposes. (To the extent that VOO tracks the index and price history exists.)

 

[rk911]

Amazing. Also, just think of all the "noise" headlines that came and went during that time that distracted people from staying invested

We weren't distracted and continued to buy and hold starting in the early 80's thru, well, thru today. Sold some shares only twice in 40-years. To say that stategy paid off is an understatement.

 

[GravitySucks]

Dang. Wished I stayed 90/10 AA that I had in 2013. The price of a good nights sleep is high!

 

[FREE866]

We weren't distracted and continued to buy and hold starting in the early 80's thru, well, thru today. Sold some shares only twice in 40-years. To say that stategy paid off is an understatement.

That's just fantastic--well done!

 

[skipro33]

Hopefully you've been Roth converting a decent amount of the $2M stash each year until you get to RMD age...

Well, short answer: no. None. Why? Because I'm already at the 22% rate maxed out and any conversion takes me to 24%. Maybe in the very early years of 2012 on to maybe 2020, it would have broken even, but not in the last years, especially now that I'm 6 years away, would it be worth the effort. I'll make more at the average S&P growth rate and pay on the end than I would paying up front by converting to a ROTH and letting the remaining balance continue to grow.
As it is, not my problem, but my heirs problem. Unless I live and require long term care, which is what this money is for. And when that happens, I'm pretty sure I can write off huge amounts for full time care as medical expenses. I was able to for my father when I had to take over his healthcare when he was diagnosed with Alzheimers.

 

[Koolau]

S&P 500 was my very first mutual fund at Vanguard. It's in DW's and my names. I was sort of "getting my feet wet" since I had to pick at least one fund at V.


It's been intresting to watch the fund over the past 25 years or so. YMMV

 

[Chuckanut]

Despite this week the S&P500 is still up over 12% for the year.

 

[Diogenes]

Discussion of the S&P 500 should not omit the other indices... namely midcap, small-cap and international (ex-US). All three have lagged the S&P, in some cases badly. So whereas it is heartwarming to congratulate ourselves about buying-and-holding the S&P, any effort at diversification would have substantially attenuated our long-term results. Not a cheery feelings... even if we're committed to long-term optimism.

 

[Al18]

There’s conservative and then there’s too conservative. I know college educated people who worked in technical fields, and they are nearly all invested in fixed annuities?