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  Some Perspective On The Performance Of The S&P 500
Posted Under: Broader Stock Market
Supporting Image for Blog Post


View from the Observation Deck

  1. The S&P 500 began today's trading session 4.15% below its all-time high of 1565.15 on 10/9/07.
  2. The index has posted a total return of 5.28% year-to-date through 1/28. It was up 15.99% in 2012.
  3. The last bar (#5) in the chart (shaded gold) represents the average annual benchmark return for the index since 1926. It changes modestly every year.
  4. Bar #1 is simply extraordinary because it reflects an annualized total return that is nearly double the historical average. Performance was significantly boosted by the Internet Revolution (1995-1999).
  5. Bar #2 reflects the fallout after the Internet bubble burst late in Q1'00. This is your so-called "Lost Decade" in stocks. 
  6. Bar #3 shows the annualized total return for the two decades captured in Bar #1 and Bar #2. The 8.2% average gain is closer to the historical 9.8% benchmark return.
  7. Bar #4 extends the period measured in Bar #3 by another three calendar years through 2012. The return was unchanged.
  8. The current estimated 2013 price-to-earnings (P/E) ratio on the S&P 500 is 13.17 (as of 1/17/13), according to Standard & Poor's. That is well below its 50-year average P/E of 16.54, according to Bloomberg.

This chart is for illustrative purposes only and not indicative of any actual investment. Investors cannot invest directly in an index. The S&P 500 is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance.

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Posted on Tuesday, January 29, 2013 @ 2:56 PM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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