Gyroscopic Investing

ozzy wrote: https://personal.vanguard.com/us/insigh ... llocations

ozzy wrote: Nominal.

ozzy wrote: https://personal.vanguard.com/us/insigh ... llocations

Arturo wrote: researching on internet today, i have found a very interesting tool. Compound Annual Growth Rate (Annualized Return) calculator for sp500 (source: Robert Shiller data base) since 1871. Obviously, SP500 starts in 1926, but maybe they are using other indexes like Down Jones:

http://www.moneychimp.com/features/market_cagr.htm

From my point of view, and as far as i understand my own portfolio, we should look at the compound rate, not general price level (performance, composite, or wherever), isnt it?

regards

D1984 wrote:

Arturo wrote: researching on internet today, i have found a very interesting tool. Compound Annual Growth Rate (Annualized Return) calculator for sp500 (source: Robert Shiller data base) since 1871. Obviously, SP500 starts in 1926, but maybe they are using other indexes like Down Jones:

http://www.moneychimp.com/features/market_cagr.htm

From my point of view, and as far as i understand my own portfolio, we should look at the compound rate, not general price level (performance, composite, or wherever), isnt it?

regards

The "modern" Dow Jones Index didn't start until 1918 IIRC. They are using backtested S&P 500 (or more likely S&P 90 or S&P Composite) total return data. The Cowles Commission in the late 1930s did a backtest by hand (it took them over a year) using the known S&P Composite market cap weighting methodolgy in order to get yearly and monthly total returns (including reinvested dividends) from 1871-1938.

Also, as far as when a 100% S&P portfolio recovered from the 1929-32 89% price fall...well, that depends.

1. If you use the Dow Jones index (which is price only; reinvested dividends not included) it took until late 1954. The Dow Jones isn't the bext index to use IMO, though, since it is price only, is not cap weighted or equal weighted but price weighted, and since whoever ran the Dow Jones index kicked IBM out of the index around 1939 or 1940 (no idea why they did this) and IBM went on to become one of the best performing large-cap stocks of the next 25 years so the Dow's performance was lower than what a more broad large cap index (like one that still included IBM) would've been.

2. If you use only the S&P 500 price only, around 1952 IIRC. Stooq has the S&P 500 (interpolated with the Composite for any days before mid-1957 in order to create an uninterrupted series all the way back) going back to the early 1800s if you want an exact date.

3. If you use the S&P 90 or S&P Composite with dividends reinvested, then in early or mid-1944 IIRC.

4. If you just want to know the first time the S&P 500 Composite with dividends reinvested (i.e. total return) hit its mid-1929 value in REAL (inflation or deflation adjusted terms---remember that a dollar in 1936 bought more than a dollar in 1929 because of the significant deflation from 1930-33) then I think it briefly hit it in late 1936 or early 1937 before it crashed again in mid-1937 and didn't hit the same level again in real terms until 1944 or 1945. I think Shiller at Yale has the monthly total return data (in Excel format) in real and nominal terms if you want an exact month.